A quick look at the latest Australian wine exports 20/21

This analysis might be a bit dry, but the movements of our wine exports are at a fascinating point right now and well worth a look.

In figures released yesterday, Wine Australia announced that Australian wine exports only dropped by 1% in volume and 4% in value over the last 12 months.

Given the ongoing Chinese anti-dumping tariffs (which add a circa 200% cost onto bottled wine imports to China), this is actually a great result, and illustrative of a surprising pickup in our trade with our other biggest export market, the UK.

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Notably, UK exports are up by 33% in value, now at $461 million. There were value gains in other traditional markets too, including the US (up 4%) and Canada (up 9%) as well as the Chinese backdoor that is Hong Kong (up a staggering 55%).

Yet all is not perfect when you have a closer look at what’s happening.

That red line is the critical one, with yields dropping over the three vintages. You could argue that it’s a good thing for Australia in the long term (given that our exports are also dropping), but the regions hit by yield drops in recent years haven’t been our bulk wine ‘engine rooms’ of the Riverina/Riverland et al but the more premium regions.

More broadly, when you look at the scale of drops from Chinese exports in the last six months, it’s fascinating that our export figures don’t look worse. Exports to Mainland China for the December 2020 to March 2021 period just $12 million compared to $325 million in the comparable period a year ago (see graph below of exports by value). That’s a lot more wine to sell (somewhere).

Obviously, the tariffs are still very new with no end date in sight, which makes this next quarter important to see whether the export trend drops significantly. I’d still expect to see an influx of export wines returning to Australia that were bound for China, and discounting in some of our other traditional American/European markets.

Regardless, this result (a 1% drop in exports) is a genuine surprise. I’d imagine Wine Australia will be quietly happy with these numbers. But are the Australian wine exporters happy too?