Australian wine exports to China were shaved off by over 95% since the punitive tariffs came into effect last November, painting a grim roadmap that leaves little breathing room for Australian wineries in the Chinese wine market for the next five years.
According to the latest data released by Wine Australia, exports to China for the December 2020 to March 2021 period were just AU$12 million compared to AU$325 million for the same period over a year ago.
This means that since China announced provisionary punitive tariffs of up to 212% tariffs on Australian wines under 2 liters late last November, exports to the country plunged by over 95% within four months.
“As the tariffs apply to product in bottles under 2 litres, the decline in exports to China was mainly in bottled exports. This, along with increased unpackaged shipments to other markets such as the UK, resulted in a drop in the share of bottled exports in the export mix, from 46% of total volume in the 12 months ended March 2020 to 41% in the same period in 2021. This led to the decline in the overall average value of exports.” explains Wine Australia CEO Andreas Clark.
As a result, Australian wine exports to mainland China for the past 12 months ended in March 2021 dropped by 24% to AU$$869 million.
This March, China announced that it has decided to officially impose up to 218% tariffs on Australian wines for the next five years, which means at the current rate by the end of this year, China will most definitely slump out of its top 10 export markets.
Growth in Europe and North America
Overall, Australian wine exports declined by 4% in value to AU$2.77 billion in the 12 months to March 2021, compared with the previous corresponding period, driven principally by the toll taken by high Chinese tariffs.
China for now including Hong Kong and Macau still ranks as its first wine export market at AU$1.02 billion (-18%), more than twice the size of its second biggest market, the UK (AU$461 million).
There are however positive news for the Australian wine industry, that is growth in Europe and the US.
Clark said there had been significant growth in exports to Europe (including the UK), which was up 23% to AU$710 million, the highest value in a decade.
There was also growth to North America, up 5% to AU$628 million, and Oceania, up 7% to AU$112 million.