Chardonnay has overtaken shiraz as Australia's top export wine variety for the first time in more than 12 years.
The switch was revealed in Wine Australia's export report for 2022 and has come as growers debate what to do with the red grapes this year.
Wine Australia market insights manager Peter Bailey said it had been another tough year for wine exporters.
"We've had rising inflation, business costs and interest rates all impacting on margins and it's still a fairly tough operating environment out there," he said.
Australian wine exports increased by just 1 per cent to 623 million litres and declined 4 per cent in value to $1.94 billion in the year ending December 31, 2022.
This time last year the United Kingdom was the main export destination for Australian wine for volume and value.
It has remained the largest market by volume but the United States is now the largest market by value.
Mr Bailey said the decrease in shipments to the UK in the second half of 2022 had been greater than the increase in overall value to other markets.
"The decline in value was mostly driven by the decline in shipments to the UK and this drop was anticipated as the previous two years Australia experienced elevated shipments as a result of the Brexit deadlines," Mr Bailey said.
"Then we saw a spike in demand in the off-trade [bottle shop] during the COVID-19 pandemic when many of the on-trade [restaurants/bars] businesses were closed."
There were increases in the value of exports to Thailand, Malaysia and Canada to offset declines in value to Singapore, Hong Kong and the US.
"Exports to China have dropped to $12 million making it the 23rd biggest market for Australian exporters so it's now a relatively small market overall."
White wines beat reds
Chardonnay is the top export variety, up 11 per cent on last year, followed by shiraz, cabernet sauvignon and pinot gris/grigio.
"There's very strong demand for Australian white wine — not just in the domestic market but also in the export market," Mr Bailey said.
"We saw white wine exports increase by 5 per cent in value in the last 12 months and 10 per cent in volume.
"Chardonnay; it's number one with volume at 11 per cent and it was probably pre-2010 the last time chardonnay was the number one variety exported.
"I think that's reflective of that shifting demand towards whites in many markets around the world."
Tough outlook ahead
Australia's grape harvest is underway and the situation doesn't bode well for the industry with the world awash with wine and domestic stock levels above a sustainable level, according to Mr Bailey.
Wine Australia market insights senior analyst Sandy Hathaway said many countries were struggling with oversupply, not just Australia.
"When you look at supply for the last 10 years, and consumption according to the OIV (International Organisation of Vine and Wine). there's been this big gap," Ms Hathaway said.
"It's something like 3 billion litres, which is more than double what Australia normally makes in a year.
"Globally we're making more wine than anyone wants to drink."
Riverland grape grower Yianni Koutouzis and his family supply grapes to wine grape cooperative CCW and make wine under their own label.
The South Australian is pleased to see the 1 per cent increase but as a shiraz and cabernet sauvignon grower, he hopes the red grape situation improves.
"We haven't decided yet whether to pull those vines out or graft them into wine varieties like chardonnay and pinot grigio," Mr Koutouszis said.
"We'll be struggling financially, that's for sure.
"It's going to be quite tough having hardly any income — or nothing at all — because we're not sure if we will drop those varieties to the ground this year."
Disease for Riverina crop
In the New South Wales Riverina — another large production area — grape prices are lower than the cost of production for red wine varieties.
Disease has also wiped out up to half of the crop and hit white grape varieties hardest, which is a bitter blow to growers who are relying on them for better returns.
Riverina Winegrape Growers Association chief executive Jeremy Cass said it had been a horrible year, with grape prices as low as $200 a tonne.
"We'll see grapes being left on the vine where they've been rejected due to disease presence," he said.
"Unfortunately, the white crops in some cases have been more susceptible to downy mildew than some of the red crops like shiraz.
"It was the worst year I've seen in the 27 years I've been down here and hopefully we won't see anything like that ever again."
