The Australian wine industry is navigating a challenging landscape in the 2023–24 fiscal year, according to Wine Australia’s latest production, sales, and inventory report. While some positive trends have emerged, the sector is grappling with decreased production, changing consumption patterns, and ongoing global economic pressures.
In 2024, the Australian winegrape crush reached 1.43 million tonnes, marking a 9% increase from the previous year. However, it remains 18% below the 10-year average of 1.73 million tonnes, marking the second consecutive year of below-average harvests. Wine production also saw an 8% increase, reaching 1.04 billion litres. Despite this growth, production is still the second-lowest since the 2006–07 season, and 16% below the 10-year average.
A notable shift within the sector is the rise in white wine production, which increased by 20% to 531 million litres. This is the first time since the 2011–12 season that white wine has outpaced red wine production. In contrast, red wine production declined by 2% to 511 million litres, well below the 10-year average of 671 million litres.
Peter Bailey, manager of market insights at Wine Australia, attributed the underperformance to a mix of challenging seasonal conditions and economic factors. He noted that heavy rainfall, flooding, windy conditions during flowering, and dry spring weather led to frost risks. Additionally, many grape growers and wine businesses deliberately reduced production due to adverse economic conditions affecting wine demand.
Sales Trends and Export Outlook
Australian wine sales volumes declined slightly, reaching 1.08 billion litres—a 0.7% decrease from the previous year and 11% below the 10-year average. Domestic sales accounted for 42% of the total, up from 37% in 2017–18, when exports peaked. White wine sales domestically increased by 3% to 200 million litres, while red wine sales dropped by 5% to 179 million litres.
On the export front, total wine sales volume held steady at 619 million litres, marking a 20-year low. However, the reopening of the Chinese market in March 2024, following the removal of tariffs, led to a surge in red wine exports to China, which reached 32 million litres—compared to just 1 million litres the previous year. Despite this rebound, exports to other markets continued to decline, reflecting ongoing challenges in global trade.
As of June 2024, Australia’s national wine inventory stood at 1.96 billion litres, a 10% decrease from the previous year but in line with the 10-year average. White wine inventory dropped by 10% to 621 million litres, now 8% below the decade-long average. In contrast, red wine stock levels remain high, with a stock-to-sales ratio (SSR) of 2.13, indicating over two years’ worth of red wine in stock, despite a 15% decrease from the prior year.
Bailey noted that while stock-to-sales ratios have improved and production and sales are more closely aligned, any increase in production could lead to rising stock levels unless sales also increase. This remains a particular concern for red wines, where the SSR is still above the long-term average.
Revenue Growth Amidst Pressures
Despite the production challenges, the Australian wine industry saw significant revenue growth. Total domestic wine sales value rose by 9% to AU$3.54 billion, driven by a 10% increase in the average sales price to AU$7.75 per litre. Export value climbed 17% to AU$2.19 billion, leading to a total wine sales revenue of AU$5.73 billion—up 12% year-on-year.
Global Context and Future Outlook
Globally, wine production in 2024 is expected to reach its lowest level since 1961, exacerbated by adverse climate conditions. However, global wine supply is still expected to exceed consumption, which continues to decline due to economic pressures and rising competition from alternative beverages. The International Organisation of Vine and Wine estimates that global wine consumption in 2023 hit its lowest point since 1996, at 22.1 billion litres.
For Australia, domestic wine consumption has fallen by 9% over the past seven years, influenced by similar global trends. Wine Australia’s report anticipates further declines in both domestic and global demand in the coming years, stressing the need for strategic alignment between production and market realities.
Bailey cautioned that reversing the sales downturn will be no easy task. He highlighted that global wine imports to China have decreased by two-thirds since 2017, making a return to previous export levels unlikely. Additionally, both Australian wine sales and exports to other markets have faced ongoing pressure due to declining consumption and growing competition. As a result, Wine Australia expects the industry will not return to an average of 1.2 billion litres in exports in the near future.
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