Australian wine exports driven by affluent Chinese middle class

THE value of Australian wine exports has surged to the highest level in a decade as demand grows from the increasingly affluent Chinese middle class — and sales are expected to get even stronger.

• Here’s cheers to record SA wine exports

CHINESE buyers thirsty for quality South Australian wine have driven up the state’s exports by 21 per cent to $1.62 million - and more growth is forecast for the industry.

About 844 million litres of Australian wine, the majority of it red varieties, were sold overseas in the year to March, as the country’s export value hit a 10-year high of $2.65 billion.

Wine exports from South Australia grew by 21 per cent to $1.62 billion and accounted for 407 million of the 844 million litres of Australian wine sold overseas.

Nationally, the value of sales to China – including Hong Kong – grew by 51 per cent to $1.04 billion in the year, figures from Wine Australia show. Sales to mainland China are set to continue growing strongly as import tariffs are abolished for Australian wine but increased on American wine.

Assistant Agriculture Minister and Riverland-based senator Anne Ruston said the massive growth in sales to China had given the local wine industry reason to rejoice.

Senator Ruston said a strong focus on maintaining quality would keep Australian wine in demand in China.

Senator Ruston said a strong focus on maintaining quality would keep Australian wine in demand in China.

“The reality is that we are never, ever going to meet the market demand that’s going to come out of China as the burgeoning middle class starts drinking more and more wine,’’ Senator Ruston said.

“What we’ve got to do is make sure that we’re seen to be the product of choice so that it will always be an over-demand, under-supply situation. And that’s not necessarily a bad thing.’’

Mark Maxwell, of Maxwell Wines, said the McLaren Vale family-owned business reached a major export milestone last year, on the back of changing consumer tastes.

“Our sales to China went through the million dollar mark last year, for the first time,” Mr Maxwell said.

“We had been actively looking for more business and we found the Chinese are educating themselves more about wine and the benefits. We’re also seeing a growing interest among younger (Chinese) people wanting to use Western habits and drinking wine.

“They’re not yet matching it with food, like we try to do, it’s more drinking it for its own flavours and pleasure.”

Maxwell Wines owner and winemaker Mark Maxwell pictured in his McLaren Vale Vineyard. Max said for the first time the business hit $1 million worth of exports to China. Picture: Matt Turner

Maxwell Wines exports about 40 per cent of its product, mainly red wine, to China, followed by Canada, England, Switzerland and America.

Wine Australia chief executive Andreas Clark said abolition by the Chinese Government of tariffs on Australian wine in January 2019 would give Australia’s exporters an advantage over competitors from France, Italy and Spain.

“We’re going to be duty free and that’s a really good result that sets us up for strong growth and success,’’ he said.

The tariff on imported US wine in China was this month increased to 67 per cent in retaliation for US duties on steel and aluminium.

Australian wines in high and lower price categories were selling well in China.

Mr Clark said increased sales to China were benefiting all of SA’s winegrowing areas.

“The Riverland is the biggest region in the country in terms of production and the positives are coming through there with uplifts in grape prices, bulk wine sales and the value that they’re delivering,’’ he said.

The most exported varieties were shiraz ($409 million), cabernet sauvignon ($357 million) and shiraz/cabernet sauvignon ($191 million).

Winemakers’ Federation of Australia chief executive Tony Battaglene said affluent Chinese consumers were willing to pay premium prices for Australian wines.

“It’s our highest pricepoint market. We’re recognised as having the highest quality,” Mr Battaglene said.

In addition to the growth in wine sales in China, poor harvests in the northern hemisphere have boosted exports to other markets, including the United Kingdom.

But the value of sales to the United States fell by seven per cent to $439 million.

Mr Battaglene said the wine industry was confident sales in the US would rebound.

“What we are doing is spending quite lot of money over the next couple of years to try and get back to a better position,’’ he said

“People there are saying there is more interest in Australian wine again.”

Australian domestic wine sales increased by three per cent to $3.5 billion in the year to 12 months to March.