Wine trade clash between China and Australia (illustration by Vino Joy News)

Australian wine exports have dipped well below long-term averages. Could imminent tariff lift from China save the it?

Australian wine exports have taken a hit, dropping 11% in value to AU$1.79 billion and 4% in volume to 604 million litres for the year ending September 2023, according to Wine Australia’s latest report.

This decline sharply contrasts with long-term averages, with global economic pressures and a decrease in wine consumption, especially in commercial wines priced under AU$10 per bottle, playing a significant role.

The downturn is multifaceted. Rising global living costs have led many to reduce alcohol consumption as a cost-saving measure. Additionally, mature markets, notably the UK and Canada, have grappled with broader economic challenges. The UK faces hurdles like inflation and increased alcohol taxes, while Canada sees a shift from unpackaged to packaged wine shipments.

However, amid the downturn, Hong Kong emerges as a beacon of hope for Australian wineries. Exports to the region surged by 26% to AU$205 million. As we have reported before, this growth is partly attributed to wineries increasing shipments to the city in anticipation of China’s potential removal of punitive tariffs on Australian wine.

Peter Bailey, Wine Australia’s Market Insights Manager, noted the overall decline since the peak at AU$3.1 billion in October 2020. “Over the past 12 months, the United States of America (US) was a major contributor to the overall drop in value, along with Canada, and the UK ,” Bailey said, “However, despite this decline over the past year, there were some positive signs in the US this past quarter, with exports growing by 8% in value in comparison to the same quarter in 2022.”

The number of Australian wine exporters also rose, with Hong Kong, Thailand, and Vietnam leading in growth. While exports to Singapore declined, emerging markets like Thailand and the Philippines showed promise.

The prospects of Australian wine exports next year however could have a quick turnaround, with China potentially removing puntive tariffs as early as next April, as we have reported. Historically, China was a powerhouse for Australian wine exports, with shipments valued at AU$1.3 billion before it slapped up to 218% punitive tariffs in March 2021.

The top markets by value this year were the US, UK, Hong Kong, Canada, and Singapore. By volume, the UK, US, Canada, New Zealand, and Germany led the charts.

Leave a Reply