China-Australia relations: wine exports to mainland China are way down, but it remains the top market
- Australia sold 45 per cent less wine to mainland China in the financial year ended in June; excluding that loss, exports to other markets were up 12 per cent
- Britain bought 23 per cent more Australian wine in the 12-month period due to coronavirus lockdowns and exporters rushing shipments before Brexit took effect
Australia’s increased wine shipments to new and existing markets were not able to offset the 45 per cent decline in sales to mainland China in the financial year that ended in June, industry group Wine Australia’s latest export report shows.
While the decline in exports to mainland China was the main driver of an overall 10 per cent drop in Australia’s total wine exports to A$2.56 billion (US$394.7 million), a shortage in wine available for export – especially from three consecutive low-yielding vintages in 2018, 2019 and 2020 – also accounted for the slower trade, according to Wine Australia’s general manager of corporate affairs and regulation, Rachel Triggs.
“Exports increased to the UK, Singapore, South Korea, Malaysia, Taiwan and Hong Kong by a combined A$240 million [US$177 million], but they did not offset the decline in exports to mainland China,” Triggs said.
Excluding the drop in exports to mainland China, Australia’s wine exports rose by 12 per cent.
The value of Australia’s wine exports to mainland China – its biggest wine export market – from last July to June was A$606 million. Before bilateral tensions worsened between the two countries last year, Australia’s wine exports to China were valued at roughly A$1 billion [US$736 million] a year, on average.
Since the imposition of import tariffs, exports of Australian wine to mainland China dropped dramatically, Wine Australia added. As an example, total exports for the third and fourth quarters of the 2020–21 financial year that ended in June were worth just A$13 million, compared with A$419 million in the same period the prior year, before the tensions and trade disruptions started.
But despite the drop in exports, China remains Australia’s biggest overseas market, with the A$606 million in exports ranking well ahead of the A$472 million worth of wine that went to Britain.
The wine trade with Britain grew 23 per cent in the past financial year due to increased purchases during coronavirus lockdowns and exporters rushing shipments before Brexit took effect, Wine Australia said. And a lot of that trade was dominated by unpackaged bulk wine exports imported to be bottled locally.
Bottled Australian wine sales suffered as a result of tensions with China, but some exporters said they were considering exporting wine in larger containers to China to get around the newly imposed duties.
Australia-China ties continue to sour – so why do Aussies still want Chinese tourists?
Other exporters such as South Australian export consultant Michele Zhuang, who previously focused her time on the wine trade with China, have diversified their interests. Zhuang has been selling oats and other Australian products to other parts of Asia since the conflict started.
She recently helped South Australian-based food manufacturer and exporter Healthy Garden secure a deal with Japanese group Fuji Trading to ship oats to Japan and South Korea.
“The sentiments of trade between China and Australia [for wine] are not good. [Chinese] importers are still not keen to touch Australian wine,” she said.
The resilience of exporters means that, for those still sticking with wine exports, other markets are growing, even if they lack China’s buying power.
Exports into Europe reached their highest level in 10 years, with year-on-year sales growing 18 per cent to A$724 million, while exports to regions such as Southeast Asia also posted growth.
However, exports to the United States declined by 7 per cent to A$400 million due to volatile sales activities caused by the pandemic, Wine Australia said.