China ditches our wine

THE mainland Chinese market, once a goldmine for Australian winemakers with more than $1bn a year in sales, has been crushed to become just a tiddler $25m market following years of political tensions and punishing trade tariffs.

Year-on-year exports to China last financial year fell nearly 96 per cent to $24.6m – ranking it about the same in terms of Australian wine consumed as Sweden and slightly more than the Muslim nation of the United Arab Emirates.

Mainland China’s tiny consumption of Australian wine, now almost a rounding error on all wine exported from Australia in 2021-22, is even smaller than the value of Australian wine drunk by Taiwan, which last year bought $29.2m worth of our wine.

The latest export figures released by Wine Australia have revealed that in the wake of tariffs slapped on Australian wine by Beijing in late 2020 of as much as 218 per cent, the China market has gone from Australia’s biggest wine ex

port destination to one of its smallest, which now only buys 1 per cent of wine exports.

The average value of Australian wine sold into China now has also collapsed by 65 per cent to an average of $4.09 a litre to totally destroy a once buoyant market.

Just before Covid-19 emerged, Australia hit $1.1bn of wine sold into the Asian powerhouse and Chinese drinkers made Australian wine their favourite drop, displacing wines from France as the most sought -after. But the d a m a g e has been done by the tariffs, which made it almost impossible for Australian winemakers to remain competitive in China and came as tensions between Beijing and Canberra escalated.

The collapse of the Chinese market has dragged down total exports. According to Wine Australia’s latest export data, Australian wine exports declined by 10 per cent in volume to 625 million litres and 19 per cent in value to $2.08bn in the year ended June 30.

The decline in volume and value was not unexpected, as it was largely the result of the continued impact of the significant reduction in exports to mainland China, driven by high deposit tariffs imposed in November 2020. This is expected to remain a significant influence on the moving annual total data of Australian wine exports until late 2022.

Wine Australia manager for market insights, Peter Bailey, said there were nevertheless some encouraging signs in key and emerging markets.

“When mainland China is excluded from the data, exports increased by 5 per cent in value to $2.06bn, an increase of $105m – the highest value since 2009-10.”

Red wine accounted for 92 per cent of the value of exports at $10 or more a litre.

“This is critical as the reduction in exports to mainland China was predominantly still red wine,” Mr Bailey said. “Off much smaller bases, still white wine and rosé also grew strongly in this price segment.”

The top five markets in terms of value for exported Australian wine were the US, Britain, Canada, Hong Kong and Singapore.