Australian wine exports to China fall from A$1.1bn to A$25m following tariffs

Tariffs of up to 218.4% on Australian wine have all but eliminated exports to mainland China, which could not be replaced by growth in other markets.

The value of Australian wine exports to mainland China fell to around A$25 million ($17.5 million; €17.1 million) in the year to June 30, 2022, just two years after hitting A$1.1 billion.

The latest figures reported by industry body Wine Australia lay bare the devastating impact of tariffs imposed by China on Australian wine in mid-2020 in response to what it claimed was dumping of wine – claims that have been soundly rejected by Australia’s wine sector.

China’s Ministry of Commerce first imposed provisional tariffs of between 107.1 percent and 212.1 percent on Australian wine in August 2020, making the tariffs permanent for five years from April 2021 with an upper limit of 218.4 percent.

Overall, Wine Australia found that exports had declined by 10 percent in volume to 625 million litres and 19 percent in value to A$2.08 billion in the year to end of June 2022, thanks mainly to the almost complete removal of exports to China. When including Hong Kong and Macau, exports last year were valued at A$206 million.

When excluding mainland China, though, the Australian wine sector saw export growth, but at nowhere near a large enough scale to account for the loss of its biggest market.

“At a region level, the most significant growth came from exports to Southeast Asia, up 51 percent to A$314 million; but also to North America, up 5 percent to A$612 million; and the Middle East, up 48 percent to A$20 million. This growth was offset by a decline in exports to Northeast Asia (including mainland China), down 64 percent to A$328 million; and Europe, down 9 percent to A$658 million,” the Wine Australia report said.

The US has taken over as Australia’s top wine export destination, accounting for A$436 million of exports by value, an increase of 9 percent over the year before. The UK, Canada, Hong Kong and Singapore round up the top five by value.

By volume, the UK is the largest export market, accounting for 227 million liters, although this represented a year-on-year decline of 15 percent.

Peter Bailey, Wine Australia manager, market insights, said in a statement that the body saw encouraging signs from key export markets outside China, as well as other emerging markets.

“When mainland China is excluded from the data, exports increased by 5 percent in value to A$2.06 billion, an increase of A$105 million – the highest value since 2009-10. This is despite volume declining by 3 percent to 619 million liters. The value growth for these markets was driven by a 9 percent increase in average value to A$3.32 FOB per litre,” he said.

“The key contributors to the value growth included Singapore, the [US], Malaysia, Thailand, India and New Zealand.

“In the markets that experienced value growth, this was largely driven by exports in the higher value segments, particularly at A$10 or more FOB per liter. This reflects the wine sales trends in many markets around the globe, which have seen a downward trend in commercial/value sales (less than $10 per bottle retail) and sales growth in premium and above segments ($10 or more per bottle retail).”