Australian wine tops France on China import volumes

Australia overtook France to become the No.1 wine import in mainland China by value for the first five months of 2019.

Australian wine growers say they are more concerned with growing export value rather than volume. Picture: Jackal Tsoi

Australia has overtaken France to become the No.1 imported wine country in mainland China by value for the first five months of 2019, cementing the nation’s position as one of the most important and valuable wine industries in the world.

Export data from industry group Wine Australia showed Australian wine exports to China (including Hong Kong and Macau) for the 12 months to June had reached a financial year record, increasing 7 per cent in value to $1.2 billion.

Volume, however, decreased 16 per cent to 154 million litres (17 million 9-litre case equivalents) as exports of wines below $2.50 per litre declined.

It is only the fourth time Australia has stolen the crown from France in the battle for the Chinese market although with the rest of calendar 2019 to play out it is unclear if Australia can maintain that momentum. Exchange rates, drinkers’ tastes and the breakout of trade wars could all disrupt Australian exports.

In October 2017 Australia briefly became China’s biggest source of imported wine, edging out France, something it did again in March and December 2018. But the sector and wine tastes are highly volatile - worsened by trade disruptions.

Political issues have also shown to be a strong influence on China’s wine imports.

It was this time last year that Australian wine shipments to China were held up or blocked at key Chinese ports, with no clear indication from Beijing as top the reason.

Many suspected it was political payback for Australian government policy linked to our alliance with the US, criticism of Chinese army incursions into the South China Sea or comments by politicians about alleged Chinese government influence in Australia.

However it now looks like Australian wine is once again flooding through Chinese ports and into wine glasses.

Wine Australia noted that looking at the first five months of 2019, Australia had overtaken France to become the number one imported wine category in mainland China by value. Australia’s imported market share has jumped 13 percentage points since 2015 to 24 per cent based on volume; compounded by the recent contraction of the total import market.

The total value of all Australian wine exports has continued to grow in the 12 months to June 2019, increasing by 4 per cent in value to $2.86 billion. China continued to drive growth and the United market also returned to growth for Australian wine exporters. Export volumes decreased by 6 per cent to 801 million litres (89 million 9 litre case equivalents). This volume decline was driven by a decrease of 7 per cent in shipments of wine below an average value of $2.50 per litre. This resulted in a 10 per cent increase in the overall average value of exported wine to $3.58 per litre, the highest level since 2009.

Wine Australia chief executive Andreas Clark said the growth in value and the declines in volume at that lower end of the price spectrum would be welcome news to the sector that has been focusing strongly on growing value.

“The strong growth in average value is positive for the wine sector and the broader economy as it lifts returns for wine businesses and flows through to regional economies through higher grape prices,” he said.

“Our National Vintage Report 2019 released last week shows that the average grape price has lifted for the fifth year in a row, reaching $664 per tonne, the highest level since 2008,” Mr Clark said.

“The turnaround in exports to the USA, which grew by 2 per cent in value to $432 million, is pleasing. Average value increasing 6 per cent to $2.83 per litre, the first growth in 2 years, rewards the efforts of the many exporters who are working actively in that market to change perceptions about Australian wines and communicate about the diversity and excellence of Australia’s offering.”

Australian wine sales into the United Kingdom experienced a slight decline, with value decreasing 3 per cent to $373 million and volume declining 4 per cent to 236 million litres (26 million 9-litre case equivalents). Average value increased 1 per cent to $1.58 per litre. The volume decline reflected some of the larger brands wrapping up their strategies of getting additional product into market pre-Brexit to mitigate any disruption to exports.