Wine Australia 2020-21 export report shows big drop in exports as SA pushes to weather China storm

Growth in other markets has helped SA cope with crippling tariffs on wine, but the nation has still seen a big drop in the sector’s export value.

The value of South Australia’s wine exports has dropped 7 per cent over the past year, with growth in other markets reducing the effects of China shutting the door to its business.

The state’s results were stronger than the Australian sector as a whole.

The country recorded a 10 per cent drop in exports, Wine Australia’s report for 2020-2021 shows.

South Australia contributed $1.8 billion towards the country’s $2.56 billion in exports.

Most other states recorded larger decreases in what they shipped overseas, which SA Wine Industry Association’s Brian Smedley said may be due to the many large companies based in the state.

Those companies have a diverse range of customers, which cushioned the impact of the Chinese market falling away. Nevertheless, “the tariffs are starting to bite hard,” Mr Smedley said.

SA Wine Industry Association’s Brian Smedley says China’s tariffs are starting to bite. Picture: Matt Turner.

“If we had any false sense of what that looks like, this is a great reminder of what it has potentially translated into,” he said.

China’s crippling tariffs of up to 212 per cent were introduced in November, amid escalating tensions with Australia.

Mr Smedley said it was likely the Chinese market would be closed to Australian producers for about five years.

The value of South Australia’s wine exports to China dropped 37 per cent, to $454 million.

However, it sent $152 million worth of wine to Hong Kong, up 163 per cent, also recording rises in exports to the UK, Singapore, Canada, South Korea, Thailand and Malaysia.

“We have to be realistic about what the opportunities are going forward,” Mr Smedley said.

“We’ll continue to build those opportunities but it’s not going to replace all the wine that was going to China.”

Jennifer Lynch from the McLaren Vale Grape, Wine and Tourism Association is encouraged the region’s average price per litre exported has held strong. Picture: Matt Turner.

McLaren Vale Grape Wine & Tourism Association general manager Jennifer Lynch was encouraged that the region’s average price per litre exported had held strong, despite the tariffs.

Across the country, the average price per litre dropped five per cent.

“The US and California specifically are likely to have a very small vintage because of drought and bushfires,” Ms Lynch said.

“We’ve had frost and flooding in Europe as well so circumstances such as these will have an impact on the global supply.” Ms Lynch said there may be opportunities for Australian wine regions to fill markets other producers could no longer service.

Wine Australia’s general manager of corporate affairs and regulation, Rachel Triggs, said the effects of smaller vintages in 2018, 2019 and 2020 meant there was less wine available to export.

She said the value of exports to the UK was at its highest level in a decade, increasing by 23 per cent to $472 million.

“Exports increased to the UK, Singapore, South Korea, Malaysia, Taiwan and Hong Kong by a combined $240 million, but they did not offset the decline in exports to mainland China,” Ms Triggs said.

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