The value of Australian wine exports continued to grow in the 12 months to 31 March 2020, but Wine Australia reports that the full impact of COVID-19 on exports is still to come.
Wine Australia Chief Executive Officer Andreas Clark said total export value increased by 3 per cent over the previous 12 months to $2.87 billion with a record average value for bottled exports of $7.12 per litre free on board (FOB). Over the same period, total export volume declined by 11 per cent to 728 million litres (81 million 9-litre case equivalents) as there is now less wine available due to lower vintages in 2018 and 2019. Although not yet complete, it is clear that vintage 2020 is delivering exceptional quality fruit but yields are down so we anticipate that inventories will continue to be depleted.
Pleasingly, the average value of Australia's unpackaged wine exports increased by 5 per cent to $1.26 per litre – levels not seen since late 2005. This reflects the continued demand for Australian wine even in a more competitive bulk wine market and this is flowing through to increased returns for grapegrowers in the critically important inland regions of the Riverland, Murray Valley and Riverina.
Mr Clark warned that the COVID-19 pandemic would 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 United Kingdom and the United States of America it was too early to get an accurate picture.
Mr Clark 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.
'We saw total export value for the quarter ended 31 March 2020 decline by 7 per cent 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 per cent lower than March 2019 and 14 per cent 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 USA 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.'
Mr Clark said according to IRI Worldwide, wine sales in grocery and mass merchandisers in the USA grew by 52 per cent in the week ending 21 March 2020.
'There are 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', he said.
'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.'
Mr Clark said that, on the upside, Australia remained well positioned in China.
The latest wine import figures from Global Trade Atlas, for the year ended February 2020, show total wine imports to China decreased by 17 per cent in value (USD) and 14 per cent in volume. This decline was driven by French bottled imports, down by 39 per cent in value (see Figure 1). Australia's bottled imports increased by 11 per cent in value and Australia was the only source country not to experience a decline in bottled wine value.
