Oz wine exports to UK drop in value and volume

By Lisa Riley

Published: 16 April, 2020

Wine Australia has reported a drop in exports to the UK in both value and volume terms.

Exports to the UK declined by 10% in value to $347m and by 9% in volume to 219 million litres in the year to 31 March 2020, according to new Wine Australia data released today.

In the same period, average value declined slightly by 1% to $1.59 per litre free on board (FOB). Quarterly performance was slightly better than the year ended figures, with value declining by 6% for the quarter ending 31 March 2020.

On a global scale, the value of Australian wine exports increased by 3% over the previous 12 months to $2.87bn driven by a record average value for bottled exports of $7.12 per litre (FOB).

However total export volume declined by 11% to 728 million litres over the same period due to less wine being available as a result of smaller vintages in 2018 and 2019.

Glass bottle exports increased by 7% in value to $2.37bn and decreased by 7% in volume to 332 million litres. This translated to a 14% increase in the average value of bottled exports, driven by an increase in exports at the premium end.

Unpackaged wine exports decreased by 9% in value to $490m and 14% in volume to 388 million litres. Due to the volume decline outpacing the value decline, the average value of unpackaged wine exports increased by 5% $1.26 per litre FOB – levels not seen since late 2005.

Although not yet complete, vintage 2020 was set to deliver “exceptional quality" fruit but yields were down so Wine Austrialia said it anticipated inventories would continue to be depleted.

Wine Australia also warned that the full impact of Covid-19 on exports is still to come, with the pandemic poised to take a toll on exports, but “due to the patterns traditionally seen in wine exports and with the situation evolving on a daily basis in major markets such as the UK and the US it is too early to get an accurate picture”, it said.

The first quarter of each calendar year was historically the quietest in terms of exports, but the slowdown was significantly steeper in the first quarter of 2020, said Andreas Clark, chief executive officer, Wine Australia.

‘We saw total export value for the quarter ended 31 March 2020 decline by 7% compared with the same quarter in the previous year, principally driven by declines in exports to mainland China. Australian export value in the month of March 2020 to China was 43% lower than March 2019 and 14% lower than the same quarter in 2019.

“It is too early to tell what the effect of the subsequent world-wide spread of the virus has had, and will have, on exports to other destinations.

“Sales data from the UK and US suggests that while cafes and restaurants have closed and sales have been lost, it’s been offset by people buying more wine for at home consumption.”

According to IRI Worldwide, wine sales in grocery and mass merchandisers in the US grew by 52% in the week ending 21 March 2020, and there were reports that "Australian wine is keeping its share amidst this growth in both the off-trade and online. We will have to see how things go when stockpiling calms down", added Clark.

“The UK and Australia went through similar surges and then calmed down. It remains to be seen if wine sales through off-licence and online balance out the decline in on-premise sales.”

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