Australian wine’s re-entry into China has bouyed the whole country’s wine exports to a record level in recent years, according to the latest data from Wine Australia. However, the industry association cautions depletion in the Chinese market due to decreased wine consumption.
Australian wine exports increased from July 1, 2023 to June 30, 2024 jumped by 17% to AU$2.2 billion , the highest level since the 12 months ended September 2021, and volume remained relatively steady at 619 million litres according to Wine Australia’s Export Report released on Tuesday.
The growth in value was due to a surge in exports to mainland China in the last three months of the financial year, as Australian wine re-stocked supply pipelines following the removal of the duties on Australian bottled wine in late March 2024.
Wine Australia Manager, Market Insights, Peter Bailey said that the rise in exports to mainland China is still a small fraction of the historical peaks achieved to the market.
“The surge in exports to mainland China towards the end of the financial year saw volume rise from 1 million litres to 33 million litres and value grow by AU$392 million to AU$400 million compared to last financial year,” Bailey said. At its peak, Australian wine exports to China alone reached AU$1.2 billion.
“While the figures are very positive, they represent the re–stocking of Australian wine in the pipeline of a major market after a long absence and do not necessarily equate to retail sales. It will take some time before there is a clearer picture of how Chinese consumers are responding to the increased availability of Australian wine in-market.
“Consumption of both domestic and imported wines in mainland China is less than a third of what it was six years ago and thus it is very unlikely that Australian wine exports will return to those previous peaks in the short to medium term.”
Peter Bailey
“Consumption of both domestic and imported wines in mainland China is less than a third of what it was six years ago and thus it is very unlikely that Australian wine exports will return to those previous peaks in the short to medium term.”
Exports of Australian wine to mainland China over time
There were 574 companies exporting to mainland China in 2023–24, up from 115 in 2022–23. However, this is far from the pre pandemic level. Prior to the imposition of duties, there were more than 2,000 companies exporting to mainland China.
Additionally, Australian wine exports to China are highly concentrated on the top 10 Australian wine exports. In 2023–24, the top ten exporters by value to the market accounted for 75%of the total value and 39% of the volume of exports.
Exports of wine priced at AU$20 or more per litre FOB, which roughly translates to 300 RMB per bottle retail, were the main driver of the value growth to mainland China, accounting for 84% of the growth.
“The growth in value has seen mainland China return to the top export market by value,” Bailey said. “However, the volume of exports at 33 million litres, is relatively small, equating to less than five per cent of Australia’s winegrape harvest in 2024 and so is unlikely to make a significant impact on the current oversupply of red winegrapes, particularly in the big volume-producing warm inland regions.”
Excluding China, Exports Hit Record Low
Excluding China, exports to the rest of the world declined by 4% ($68 million) to AU$1.8 billion and volume decreased by 5% (33 million litres) to 587 million litres. This is the lowest volume exported to the rest of the world in a financial year since 2003–04. The decline in volume was most significant in unpackaged exports priced under AU$1.50 per litre to the United States (US) and Canada (down a combined 20 million litres).
“Global trading conditions remain very challenging with wine consumption continuing to fall in many markets around the world due to moderation trends and cost of living pressures. There are also enduring problems in shipping, with a shortage of ships globally and freight and charter rates on the rise,” Bailey explained.
Australia is not the only country negatively impacted by these factors. Wine exports have also declined from other major wine producing countries. For example, in the 12 months ended April 2024, the volume of wine exported from Spain fell by 2%, France by 7%, Chile by 7%, South Africa by 12%, Germany by 5% and New Zealand by 14%.
Among varieties exported from Australia, still red wine was the main beneficiary of the growth in exports to mainland China, with total volume of red wine up 3% to 330 million litres and value up 27% to AU$1.5 billion compared to 2022–23.
Cabernet Sauvignon grew in value by 41% to AU$469 million and volume by 12% to 70 million litres, with the US also contributing to the increase in exports of this variety.
For white wine, Chardonnay remained the number one variety and while volumes declined by 6% to 158 million litres, value was up marginally to AU$307 million. The top performer for still white wine was Pinot Gris/Grigio, up 15% in volume to 51 million litres and 16 per cent in value to AU$101 million, a record financial year result for the variety. The US was the main driver of the growth in Pinot Gris/Grigio exports.
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