Drop in Western Australian exports to China

The Western Australian wine industry is being forced to reassess the extent of its reliance on China after seeing a sharp fall in sales and volume.

According to the ABC, new export figures reveal wine exports from WA to China in the 12 months to July 2014 were down 25% by volume and 20% in sales.

The national wine industry body, Wine Australia, said the value of the states exports to china fell from $AUD41.6 million (£23.4m) to $AUD33.4m (£18.8m).

Most alarmingly the drops have occurred despite a considerable focus on the growing Chinese market following exponential growth from the early to mid 2000’s until 2013 during which time China became WA’s single biggest export market.

WA Wine Industry Association chief executive Larry Jorgensen said shifts in Chinese domestic policy are a key factor: “We think it’s happening because of the austerity measures everyone has heard about that the Chinese government has implemented because of a bit of ostentatious behaviour in gift-giving on the part of government officials,”

“That’s had an effect to some extent and there’s a possibility as well, I suppose, that other countries have taken some of the market share we were dealing in previously.

“I think people are re-assessing how much they put focus onto China and are starting to consider other markets.”

The slump comes on the back of a difficult period for Western Australian producers as global economic struggles and an unfavourable exchange rate have been compounded by difficulties relating to domestic sales.

“It probably is as tough as it’s ever been for the wine industry, the perfect storm that we speak of – the dollar, the diminishing markets, those sorts of things have certainly come together,” said Jorgensen.

“Probably given where we trade in the market, at the premium end, in tough times people assess what they’re spending their money on so we may have felt it perhaps a little bit more.”

Murray McHenry remains confident growth in China is still viable.

But the difficulties in China have not been uniform across WA and Margaret River producer Murray McHenry of McHenry Hohnen said he’s managed to keep his sales to China growing: “Australian wineries, particularly boutique ones in Margaret River, have had to look offshore for quality markets and China, for us, is proving to be that.”

McHenry blamed the quality of some of the wines sent to China during the initial growth period: “They were sending up wines under labels that no-one in Australia has ever heard of and they were just emptying their tanks of what was known as the ‘wine glut’ in Australia.”

“Australia’s reputation was tarnished by these really bad wines that were sent there.”

Margaret River Wine Association president Nigel Gallop is confident the dip can be rectified: “I think (the drop in exports) is an adjustment and I think we can grow again from here, as long as we get that message strongly out there that Margaret River is growing great, world-class wines.”

“The more we get that message out there to China and the rest of the world, the better this industry is going to be.”

Jorgensen said it was “inevitable” that sales to China will rebound.