Australian wine exports have reached a three-year high, thanks to the re-entry into its most lucrative market China, according to the latest data released by Wine Australia. However, the trade association also cautions if the growth can sustain.
According to a Wine Australia Export Report released Tuesday, annual Australian wine exports reached their highest levels in both volume and value over the past three years for the year ending September 2024.
The resumption of exports to mainland China, following the removal of punitive tariffs in March, was a primary contributor to this boost.
As of September, Australian wine exports jumped by 34% in export value to AU$2.39 billion (US$ 1.59 billion), while its volume also saw a 7% increase, totaling 643 million liters over the past 12 months.
Shipments to mainland China soared to AU$612 million (US$406.7 million), shortly after China lifted punitive tariffs in late March, accounting for 25.6% of the total export value. Its export volume to the country stood at 59 million liters, representing 9.18% of the total volume.
Exports to the rest of the world remained stable in value at AU$1.78 billion (US$ 1.18 billion) but declined in volume by 3% to 585 million liters.
Peter Bailey, the manager of Market Insights at Wine Australia, noted that the exports to China contributed significantly more to the increase in value than in volume, indicating that this will not alleviate the wine oversupply issues in Australia.
In August 2023, Rabobank warned in a report that even if China were to immediately remove the tariffs and consumption returned to previous levels, it would still take Australia at least two years to deplete the wine surplus, which could fill 859 Olympic swimming pools.
“While the export figures to mainland China are very positive, the impact on total export value is much larger than volume due to the premium price point of most wine entering the market,” Bailey said. “As such, this increase is unlikely to reduce the oversupply of red winegrapes in the warm inland regions.”
Bailey also pointed out that the boost in exports to China may not be sustainable. “It’s important to note that shipments in these first six months are likely to be characteristic of re-stocking Australian wine after a long absence,” he said, “Export levels are not equivalent to retail figures, and it will take time before it is evident how Chinese consumers are reacting to having Australian wine back in market.”
Chinese customs data supports Bailey’s view, showing a notable 60% month-on-month decline in Australian wine import value and a 42% decrease in volume in August, signaling a slowdown in demand.
“Despite this recent growth in exports, it is increasingly important to pursue market diversification and defend our share in other wine markets,” Bailey commented.
Regarding Australia’s other main wine export destinations, the US experienced a significant decline in both value and volume, with a drop of AU$25 million (US$16.61 million) to AU$341 million (US$ 226.6 million) and a decrease of 21 million liters to 113 million liters. In contrast, export value to Hong Kong rose by AU$65 million, reaching AU$270 million (US$ 179.4 million).
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