Australian export wine markets emerge following rising Chinese tariffs

Wine exports to mainland China are bottoming out, with just six million liters exported in the past fiscal year, worth $24.6 million.

This was a huge drop since the end of the financial year in 2020, when exports to mainland China stood at 120.7 million liters and were valued at $1.1 billion in the 12 months to 2020. to June 30.

This was before China imposed import tariffs of around 220% on imports of Australian bottled wine later that year.

Overall, it was a difficult financial year for Australian wine producers, with exports down 10% in volume to 625 million liters and down 19% in value to $2.08 billion for the year ending June 30.

Wine Australia’s market intelligence manager Peter Bailey said the Chinese results were expected but there were signs of hope in other markets.

“If you look at exports out of China, we’ve actually seen an increase, so over the last 12 months, if you exclude China from those numbers, exports are up 5% in value to $2.06 billion. of dollars.”

The United States was the top export destination by value, registering a 9% increase to $436 million in the last fiscal year.

Wine Australia’s export results show how much Chinese exports have fallen.(Supplied: Wine Australia)

It proved a tough market to lean on, but Mr Bailey said sustained effort appeared to be paying off.

“It’s been a slow burn in the US, but we’re seeing strong growth in value, especially above $10 per litre, although there has been growth in almost all price segments” , did he declare.

“This very strong growth at $10 per liter increased by 57% to $61 million and that’s the highest level since 2009.”

He said the stronger growth in premium wine exports was in line with market trends in the United States, which had grown at a much faster rate than the commercial value segment, which was in decline.

But the gains were offset by a decline in the UK, a market that had been the largest by volume and value over the past year.

A chart with a world map shows where wine is exported
Wine Australia’s export report shows growth in other markets.(Supplied: Wine Australia)

This market fell 10% in value to $421 million, but remains the largest market in volume, despite a 15% drop to 227 million litres.

“The drop comes after exports hit a decade high in 2021 and it’s really down to an increase in wine sales in the off-trade. [retail, off-premises consumption] where Australia has its highest market share,” Mr Bailey said.

“This was due to the COVID-19 related catering closure, but on top of that we also had exporters sending wine before Brexit, so in 2021/22 we have seen the market return to a more normal situation, hence the decline in volume and value.”

Producers struggle to adapt

Australia’s largest wine region, the Riverland, has not been immune to export losses.

Salena Estate Wines owner Bob Franchitto said he’s concerned about more than tariffs in China.

The Wine Australia report highlighted growth in Singapore, the United States, Malaysia, Thailand, India and New Zealand.

“Every deal is worth pursuing, but those deals won’t replace what happened with China,” Franchitto said.

He said COVID had a bigger impact than Chinese tariffs.

“We are looking at other markets and we have started supplying a bit in the United States, and we have an order in Japan and Malaysia seems to have an opportunity for us,” he said.

“But they’re not going to pick up the slack that was lost between COVID and China overnight.”

Mr Franchitto said it would probably take three or four years for the wine industry to recover.

A man stands in a vineyard smiling at the camera.
Bob Franchitto says wine exports have been tough this year.(Supplied: Salena Estate)

Mr Franchitto said continued freight delays were causing more suffering for winegrowers.

“Right now trying to ship wine is getting pretty tough,” he said.

“You know you’re getting orders, you’re getting a booking, you’re ready to ship and all of a sudden your containers are cancelled, your ship is cancelled…it’s delayed so everything seems to be taking a lot longer.”

Australian Grape and Wine chief executive Tony Battaglene said Australia’s wine industry will suffer more in coming years due to oversupply issues.

“We have full tanks…and we can’t get the wine overseas because the freight logistics are really tricky, so I think we’re going to get into a situation next year where it’s going to be really difficult for the producers. “said Mr. Battaglene.

He said it was the toughest time he had seen in his 24 years in the industry.

“I think it’s a cycle that’s contracted and I think it’s going to take a long time to get up because these COVIDs have generated issues with freight, inflation, labor shortages work – there is no quick fix to these problems,” he said.

Despite some positive signs in some markets, Mr Battaglene said they could not reach the size of the Chinese market.

“The markets are doing very well, we are making good progress, especially in South Korea as well as Hong Kong, Singapore and Thailand,” he said.

“India is a long burn, it will take time.”

He said the industry had performed well in the recent announcement of the free trade agreement.

“But realistically, it will be some time before we see any progress in this market.”

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