Wine exports from Australia have plummeted 18 per cent in value during 2008, as the strong Australian dollar stunted exports during the first half of the year, to $2.47 million.

Data from the Australian Wine and Brandy Corporation indicated that wine exports also dropped 11 per cent in terms of volume in 2008 to 698 million litres. The industry, in fact, took a double hit during the second half of the year on account of the global financial crisis that dampened demand despite a better than expected grape harvest.

However, the silver lining around the otherwise dark clouds of bad news was that 2008 would still be recorded as the fourth highest year for the volume of wine exported from Australia. Asia seemed to have developed a taste for Australian wine, with the Chinese market alone growing 32 per cent in value.

The decline is the first in 13 years of wine exports for Australia, and is being attributed mainly to the dual causes of the global financial crisis for the second half of the year, and volatile exchange rates during the first half of 2008. The Australian reported that this was the first reversal of fortune the the industry witnessed in the 15 years that the AWBC has been compiling export data, and was the lowest revenue number since 2003.

Reports also quoted some analysts as saying that other than the global financial crisis and the exchange rate volatility, intense competition from wine producing nations was also a factor, as there were lower priced options available in the international market.

The elimination of import duties propped up Hong Kong at the third spot in terms of growth, with its imports going up 17 per cent to A$36 million. Japan's import of Australian wine increased four per cent to fifth in terms of value growth, reports said.

China was reported to have spent around $74 million on Australian wine during 2008, 32 per cent higher than 2007. As a market for Australian wine, China ranked fifth in terms of value, even though gains from this market were not enough to offset the losses from the US market, which is the second-largest export customer for Australian's winemakers. US sales were reported to be lower by a smaller 5.6 per cent by volume, but were way lower by value having plummeted 26.5 per cent.

Reports quoted the Australian Bureau of Statistics as saying that wine sales for November showed exports dropped by 26.3per cent over a single month. They also said that Australians themselves were consuming lesser domestically – produced wine, with total sales having dropped over three per cent during November 2008 as compared to November 2007, though some reports said that the trend was evidence of a move towards quality rather than quantity.

The largest winemaker, Constellations Brands, painted a rather gloomy picture of the global wine market in its update while warning that it was in the process of "recalibrating [its] sales expectations" due to the economic slowdown. Constellation became Australia's largest winemaker following its 2003 takeover of BRL Hardy. The company reduced its full-year earnings forecasts after a seven per cent drop in third quarter sales, which Constellation's CEO Robert Sands attributed to "adverse economic conditions" around the world. Constellation reported an 11 per cent drop in third quarter sales to Australia's number one wine export market, Britain.