Australia’s wine industry is navigating a period of complex transition, marked by a combination of production fluctuations, changing consumer behavior, and global economic pressures. While there are pockets of positive growth, challenges remain across both domestic and international markets.

Production shows signs of improvement but remains below average

The 2024 winegrape crush in Australia reached 1.43 million tonnes, representing a 9% increase from the previous year. However, this figure is still 18% below the 10-year average of 1.73 million tonnes, making it the second consecutive year of significantly below-average yields. Similarly, total wine production rose by 8% to 1.04 billion litres, yet it remains 16% below the decade-long average and is the second-lowest output since 2006–07.

White wine production stood out as a bright spot, climbing 20% to 531 million litres—marking the first time in over a decade that white wine outpaced red. Conversely, red wine output fell by 2% to 511 million litres, well below its 10-year average of 671 million litres.

Peter Bailey, market insights manager at Wine Australia, explained that the industry faced a combination of difficult seasonal conditions and strategic reductions in output. “This was another difficult season in many regions, with heavy rainfall, frost risks, and windy conditions affecting flowering,” he said. “In many cases, growers and producers made intentional decisions to scale back due to current economic and market conditions.”

Domestic sales shift in favor of white wine

Wine sales in Australia declined slightly in volume, falling 0.7% to 1.08 billion litres, 11% below the 10-year average. Domestic consumption accounted for 42% of total sales, up from 37% in 2017–18, reflecting a gradual increase in local demand amid slowing exports.

White wine sales domestically rose by 3% to 200 million litres, indicating growing consumer preference for lighter styles. In contrast, red wine sales declined by 5% to 179 million litres, underscoring the ongoing challenges for red varietals.

On the export front, volume remained steady at 619 million litres—its lowest level in two decades. A notable exception came from China, where the lifting of tariffs in March 2024 led to a dramatic increase in red wine exports, which soared from 1 million litres to 32 million litres. However, exports to other markets declined, suggesting ongoing global trade pressures and softening demand.

Stock levels decline but red wine remains oversupplied

Australia’s national wine inventory in June 2024 stood at 1.96 billion litres, a 10% year-on-year decline that brings stock levels closer to the 10-year average. White wine inventory dropped by 10% to 621 million litres and is now 8% below the long-term average, indicating improved balance between supply and demand.

Red wine, however, continues to face oversupply issues. Despite a 15% decrease in stock, the stock-to-sales ratio remains elevated at 2.13—signaling more than two years’ worth of red wine currently in storage. Bailey warned that unless demand improves, even modest production increases could result in renewed inventory build-up, particularly for red varietals.

“The survey results indicate that stock-to-sales ratios have reduced, and production and sales are more closely aligned,” Bailey said. “But given that production is still well below average, any future increase could easily tip the balance unless sales grow accordingly.”

Revenue increases despite volume challenges

Despite challenges in volume, revenue for the Australian wine industry saw a healthy rise in 2024. Domestic wine sales value increased by 9% to AU$3.54 billion, driven largely by a 10% rise in the average price per litre, which now stands at AU$7.75. Export revenues also improved, climbing 17% to AU$2.19 billion. Altogether, the industry recorded AU$5.73 billion in total sales revenue—up 12% from the previous year.

While these financial figures are encouraging, experts caution that the market outlook remains uncertain. Global wine consumption is declining and is projected to continue doing so. The International Organisation of Vine and Wine reported that 2023 saw the lowest global wine consumption since 1996, totaling just 22.1 billion litres.

Future outlook remains cautious

Australia's domestic wine consumption has fallen 9% over the past seven years, mirroring international trends. Wine Australia’s report suggests further declines may be ahead, underscoring the need for producers to align output more closely with evolving market conditions.

“There are no easy solutions for increasing sales,” Bailey concluded. “Even with the reopening of the Chinese market, global imports to China have dropped by two-thirds since 2017. Meanwhile, our sales in other markets, including domestically, have been under pressure due to declining consumption and rising competition. A return to previous average sales levels of 1.2 billion litres is unlikely in the near future.”