China is replenishing its stock of Australian wine, leading to a surge in sales for exporters. However, the industry is realistic about the future of a market that has undergone significant changes since the imposition of tariffs four years ago.
Recent trade data from the Australian Bureau of Statistics (ABS) reveals that South Australia (SA), the largest wine exporting state in Australia, shipped over $343 million (US$227.5 million) worth of wine to China in the three months following the lifting of trade restrictions at the end of March.
This resulted in a 19% growth in SA wine exports, accounting for two-thirds of the total value of Australia’s wine exports in the last financial year—$1.56 billion (US$1 billion) out of $2.3 billion (US$1.5 billion).
Australian wine exports to China plummeted in November 2020 when tariffs exceeding 200% were imposed. By 2023, exports had decreased to 1.4 million liters valued at $10.1 million (US$6.7 million), down from a peak of 121 million liters worth $1.3 billion (US$0.86 billion) in 2020, with the number of exporters dropping from 2,198 to 117.
The removal of tariffs in March led to a significant increase in sales, boosting national wine exports to China to $400 million (US$265.3 million) and 33 million liters in the last financial year.
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Lee McLean, the chief executive of Australian Grape & Wine, acknowledged the strong start but emphasized the need to assess the Chinese market objectively.
“While China will remain a crucial market for Australia in the future, it is unlikely to reach the $1.2 billion (US$0.8 billion) annual export levels seen before the imposition of import duties,” McLean stated.
He also noted that the Chinese market would not solve Australia’s immediate oversupply issues.
In August last year, Rabobank estimated that it would take at least two years to address Australia’s wine surplus, which currently stands at 400 million liters, primarily red wine.
Peter Bailey, Wine Australia’s manager of market insights, highlighted that while China is a significant market for red wine, the surplus originates from large-producing regions in Australia, mainly offering wines at the commercial price range.
“The wines exported to China are predominantly premium products,” Bailey added.
Despite positive export figures, Bailey cautioned that it would take time to determine if the demand was sustainable or merely a restocking phase.
The upcoming export data for the September quarter, expected in October, will provide insights into the movement of Australian wine in the market.
Furthermore, Wine Australia is organizing a roadshow in China later this month, featuring 50 exhibitors showcasing 140 brands across Beijing, Shanghai, Guangzhou, and Chengdu.
Additionally, SA Trade Minister Joe Szakacs is leading a delegation to China this week to facilitate business and government engagements aimed at promoting SA’s wine, seafood, agribusiness, and technology exports.
