Australian wine exports have dropped to their lowest level in 22 years, with the amount sent overseas falling below 600 million litres for the first time since 2004, according to a new report from Wine Australia. The hit lands across the whole chain, from growers to cellar doors, while the market narrows and the people doing the work are left to absorb the squeeze.
Who Pays When the Market Shrinks
Paul Turale, general manager of market development at Wine Australia, said everybody in the supply chain across Australia was “feeling the pinch.” He said, “Around 60 per cent of the wine that we produce here in Australia is exported so as the market becomes tougher and those opportunities become more limited it's a squeeze right throughout.” That’s the basic arrangement: production stays concentrated, export dependence stays high, and the costs of a falling market get pushed downward.
Australian winemakers took an overall $183 million hit as exports dropped seven per cent last financial year to $2.3 billion. Exports to Australia’s three largest markets — China, the United States and the United Kingdom — all dropped. Wine Australia said the decline mirrors a broader global trend of declining wine consumption over the past decade, with worldwide wine consumption falling to its lowest level since 1961.
The Small Producers Feel It First
In Perth's Swan Valley wine region, Faber Vineyard owner and winemaker John Griffiths said his business was suffering. “It's ridiculously tough,” he said. “If there's less wine being sold, we're trying to sell into a market that's shrinking, so that's never going to be good. Someone is going to start discounting their wine. If they're not selling it they'll start discounting it and if they're discounting it then it puts pressure on us.” The logic is brutal and familiar. When the market tightens, the pressure doesn’t stay at the top. It gets shoved onto smaller producers trying to survive inside the same system.
Australia did pick up buyers in the Canadian market because of its battle over tariffs with the United States, according to the report. That issue has reduced the availability of US wine in Canada and allowed Australian producers to sell more there. Exports to Canada rose 20 per cent in the last financial year to $188 million. Griffiths said all winemakers were trying to take advantage of the opportunity in Canada. “Australia's been selling wine in Canada for a longtime quite successfully,” he said. “But the opportunity is exploding. If you take the Californian wines out of the Canadian market there's a huge opportunity.”
What the Industry Calls Adaptation
Australian wine producers are not alone in battling falling exports, with the decline broadly matching a drop internationally in wine sales. Global wine consumption currently sits at about 20 billion litres, down from almost 30 billion litres in 2018. The Wine Australia report said consumers are increasingly moderating alcohol intake, facing cost-of-living pressures and shifting towards alternative beverages. Those pressures sit outside the vineyard gates, but they still shape who gets to sell and who gets squeezed out.
To accommodate changing tastes, Griffiths said Faber Vineyard was adapting to lighter-bodied wines. “We're making more grenache, pinot wines, which are lighter-bodied than the shiraz's we've made for a long time,” he said. “But we're not stopping making shiraz.” Turale said there were also big opportunities in low alcohol wines. “In particular what we've termed the mid-strength, or that 7-9 per cent alcohol,” he said. “It plays to the benefits around the moderation, in particular, that we think is an important and growing sector.”
Margaret River was one of a small number of Australian wine-growing regions to buck the national trend, with exports up five per cent over the past 12 months. Penny Dickeson, chief executive officer of Margaret River Wines, said sustainable wines were playing an important role. “Wine customers are happy to pay more for wines when they understand the effort and consideration that has gone into making such a wonderful product,” she said.
China remains Australia's biggest export market by value at $756 million, despite a 15 per cent drop in wine sent there. In terms of volume, the United Kingdom is still the biggest market for Australian wine, followed by the US. But Wine Australia said exports to the two countries was at its lowest level in 25 years. Australia's 2026 vintage came in at 1.3 million tonnes of grapes harvested, which Turale said was well below the 10-year average. “The market is already adapting and moving to where the market is,” he said. The market, as ever, gets to speak last.