Australia sends AU$86 million of wine to China in first month since tariffs axed

Producers shipped wine worth AU$86 million (£44.7 million) to China in the month after sky-high tariffs were lifted, says the country’s trade minister.

On 29 March 2024 China abolished the astronomically high tariffs on wine exports from Australia, which have almost brought the Australian wine industry to its knees over the last three years.

According to Wine Australia the number of exporters to China fell from 2,198 to just 117 in the 12 months to December 2023, firm evidence of the impact the tariffs were having.

Since those tariffs were lifted, however, Australian wine exports have soared, and Trade Minister Don Farrell said that he is “very optimistic” that the country will see “a full recovery into China”.

“All the evidence so far is that there is pent up demand for Australian wine in the Chinese market,” he said.

That might well be true, but during the period in which Australian wine was absent from the China market, France has swooped in to take the top spot, representing a 47% share of China’s imported wine, followed by Chile with 17%, and then Italy and Spain.

Australia will have some work to do to claw back its dominance in the market.

Addressing the surplus

A revival of exports will also help make a dent in the wine surplus Australia is currently sitting on – around 2.8 billion bottles last year.

“We know from our survey results from last year that inventory levels remain above the 10-year average, with around two years of wine sales in stock,” Paul Turale, Wine Australia’s general manager for marketing, told db in May.

He believes that the tariff removal, alongside “a historically low vintage in 2023”, will help to rebalance supply and demand.

Turale stressed that the tariffs were not the only contributing factor to causing the surplus.

“Not all of this can be attributed to the reduction in exports to mainland China,” he said. “While the reduction had an influence, the sector had been in a perfect storm of operating challenges for a few years, including a very large vintage in 2021, the Covid-19 pandemic and associated changes to consumer preferences, and a global shipping crisis, just to mention a few.”

Speaking to the drinks business James Lindner, co-owner of Barossa producer Langmeil Winery, said that many Australian producers had managed to reallocate their wines away from China throughout their distribution networks.

However, now “it will be a balancing act to ensure that those who supported us when we needed them do not feel under-appreciated with the return of what could once again be Australia’s largest export market,” he revealed.

The Australian Government announced this week that it would spend AU$3.5 million on supporting the wine industry through this next chapter, including funding marketing roles to help boost sales in China, Japan and the US.

 

 

 

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