Down Under down: Australia wine exports to China reach new low

Wine imports from Down Under are down yet again.

Just ahead of Australia PM Anthony Albanese’s visit to China this week, and just after China agreed to review its up to 218% in tariffs on Australian wine last week, an export report by Wine Australia again highlights just how dire is the situation.

According to the data, exports of Australian wine to mainland China for the year ending September 30 totaled just 1 million liters (down 80 percent) worth US$7.3 million (down 65 percent). That put China behind more than two dozen markets, including Finland, India, Thailand and the United Arab Emirates.

That was also down from USD20.9 million in exports to China one year earlier. And a distant cry from 30 October 2019 when Wine Australia posted that exports to China, including Hong Kong and Macau, then topped USD1.25 billion. More than USD1.1 billion of that was for Mainland China alone.

US, Asia top markets

The top export markets for Australia this past year were the United States (USD366.3 million), United Kingdom (USD353.9 million), Hong Kong (USD205 million), Canada (USD147.5 million) and Singapore (USD116.6 million).

Looking at the bigger picture, Australian wine exports declined globally by over 10 percent. Per Wine Australia’s summary:

“In the year ended September 2023, Australian wine exports declined by 11 per cent in value to $1.79 billion and 4 per cent in volume to 604 million litres (67 million 9-litre case equivalents). The average value declined by 7 per cent to a to $2.96 per litre free on board (FOB). Total export value has been on a downward trend since peaking at $3.1 billion in the 12 months end October 2020.”

Wine Australia

Despite almost zero exports to mainland China, Asia still had a slight lead as top regional destination, with a 33 percent share of value versus Europe at 30 per cent and North America at 29 per cent.

Market Turmoil

The data comes at a time when the China market itself is struggling, with decreasing overall imports as well as local production the past half-dozen years. Given the uncertain economy, and the presence of stocks of Australian wine in China even three years after the tariffs hit, retaking a significant amount of market share in the near term is bound to be a daunting task for Australian producers.

Australia’spowerhouse Treasury Wine Estates and its Penfolds brand, which had more import value than individual countries such as Spain, Italy and the United States in 2019, have kept a steady China presence during the past three years by holding tastings, making wines, importing Penfolds labels from France and the United States, cooperating with the China Alcoholic Drinks Association, which spearheaded the tariffs in the first place, and more. Most recently, Penfolds chief winemaker Peter Gago visited Yunnan in China, where the company is working on a top-end wine.

“I will be doing events while I’m here [in Yunnan] this week, with locals, with government and hopefully with the China Alcoholic Drinks Association,” said Gago, per a recent article in The Australian. Referencing Penfolds nearly 180-year history, he also was quoted as saying, “We are looking at the next 180 years. There are going to be blips and hurdles–tariffs was one of them–but when you look at that across 180 years it’s just a blip.”

Finally, I’ve been talking to a lot of people about the prospects for Australian wine in China should the tariffs be lifted and will be posting more about that soon.

For the full export report from Wine Australia, which closed its China office in 2022, see here.

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