Aussie wine exports to the UK up in value but volume drops

By Lisa Riley

Published: 04 August, 2020

The value of Australian wine exports to the UK increased by 3% to AU$383m in the 12 months ended 30 June 2020, according to new data released by Wine Australia.

Volume however declined 2% to 232 million litres, while average value increased 5% to AU$1.65 per litre free on board (FOB), with growth at both low and higher price points.

Overall, the total value of Australian exports decreased by 1% to AU$2.84bn, as a result of measures to contain Covid-19. Meanwhile, the average value of exports grew to AU$3.89 per litre FOB, the highest level since 2004–05, said Wine Australia.

The growth in average value contrasted with declines in total global export volumes, which decreased by 9% to 730 million litres led by wine exports in the lower price segments.

Wine Australia put the decline in volume down to less wine being available for export given the lower vintages of 2018, 2019 and 2020.

"As the 2020 vintage is the smallest Australia has experienced in a decade, the decline in export volumes was principally driven by supply shortage rather than softening demand," said Andreas Clark, CEO of Wine Australia.

Exports during the first two quarters of the year were following the growth trajectory of previous years but they fell in the latter two quarters as the restrictions hit economies world-wide, he added.

“The advent of the Covid-19 pandemic has resulted in unprecedented disruption to wine markets around the world with the closure of restaurants, cafes and bars.

“While the first two quarters of 2019–20 showed increases in exports, in the third quarter ending March 2020, exports declined 7% in value on the comparable quarter in the previous year, while the fourth quarter was slightly stronger with a decline in exports of 4% in value,” he said.

There remained “considerable uncertainty” surrounding the extent, duration and impact of the pandemic in health and economic terms, he added. However, there were “some clear trends emerging in key markets in relation to wine sales”.

“Overall, demand for wine and wine consumption has held up in most markets around the world.

“The biggest impact has been on how consumers have purchased wine with the shutdown of the on-premise channel and a shift to purchasing more wine online. In the off-trade, there has been growth across all price points, with the trend to premium and fine wine continuing. However, the trend for declining commercial/value sales has reversed, with people gravitating to known brands and everyday rather than occasion wines.”

In terms of destinations, Australian wine exports to Europe increased 3% in value to AU$615m and by 0.3% to South East Asia to AU$181m.

The value shipped to Europe was the highest since 2011–12, while shipments to South East Asia represent a financial-year record.

The UK, Germany and Scandinavia drove growth in Europe, while Singapore and Indonesia were the key drivers behind the growth in South East Asia.