China tariffs slow Australian wine exports

03 February, 2021 by Andy Young

The impact of the Chinese tariffs on Australian wine exports has been immediately felt, with exports decreasing by one per cent in value to $2.89bn in the 12 months to December 2020.

Wine Australia Chief Executive Officer Andreas Clark highlighted the impact of the tariffs, saying that despite the COVID-19 pandemic, exports hit a record year-on-year value of $3.1bn in the 12 months ended October 2020, before recording a steep decline in the final two months of the calendar year. The previous year-on-year high point had been $3bn reached in 2007.

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Wine exports saw a sharp increase from August to October last year, which was primarily to mainland China and the UK, while to decline seen in November and December was predominantly in exports to China.

Clark said the decline in exports to China had been offset by significant growth in exports to Europe, up 22 per cent to $704m – the highest value in a decade. There was also growth in North America, up four per cent to $628m, and Oceania, up 11 per cent to $115m.

“Wine businesses are resilient and are already adapting to these changed market conditions, increasing their engagement in markets other than China, particularly the UK, USA, Canada and the domestic market,” he said.

Clark said that, unsurprisingly, exports to mainland China were immediately down following the imposition of the temporary tariffs in November. The sharp decline in export volumes and value in the final two months of the year saw the overall value for 2020 decline by 14 per cent to $1.01bn and volume drop by 29 per cent to 96 million litres (10.7 million 9-litre case equivalents).

It was expected that exports to China would remain low in coming months affecting total export numbers during 2021.

In the year to December 2020, the value of wine exported in glass bottles (the subject of temporary tariffs imposed by China in November 2020) decreased by five per cent to $2.3bn while volume decreased by nine per cent to 311 million litres (35 million 9-litre case equivalents).

Unpackaged wine exports increased by 20 per cent in value to $585m and increased nine per cent in volume to 428 million litres (48 million 9-litre case equivalents). The average price of unpackaged wine increased by 10 per cent to $1.37 per litre FOB.

Destinations

The top 5 markets by value were:

  • Mainland China, down 14 per cent to $1.01bn
  • United Kingdom (UK), up 29 per cent to $456m
  • United States of America (USA), up 4 per cent to $434m
  • Canada, up 5 per cent to $192m, and
  • Hong Kong, up 27 per cent to $132m.

The top five destinations by volume were:

  • UK, up 19 per cent to 266 million litres
  • USA, down 1 per cent to 136 million litres
  • Mainland China, down 29 per cent to 96 million litres
  • Canada, up 0.3 per cent to 56 million litres, and
  • Germany, up 10 per cent to 35 million litres.