Wine sales to China slump as tariffs bite but UK trade on the up

The once booming $1.3 billion wine export market to China has collapsed, but drinkers in Britain are enjoying more Australian wine to buttress the local industry.

According to Wine Australia’s latest Export Report, Australian wine exports during the 2021 fiscal year fell by 10 per cent in value.

The crushing impact of Chinese tariffs on Australian wine has resulted in exports to the nation slumping to $13m in the first six months of the new tariff regime, down from $419m for the same period before tariffs were imposed, obliterating what was once a $1.3bn market.

However, many Australian winemakers have struck new markets in Britain as a strong presence in the off-premise market – where Australian wine does well at supermarkets and bottle shops – has helped cement the UK’s position as the largest export market by volume for Australian wine.

Exports to the UK are at their highest level in a decade.

 

The loss of the Chinese market since tariffs of more than 200 per cent were slapped on Australian wine did sink total exports, despite the better sales into the UK from other parts of Asia including Hong Kong.

According to Wine Australia’s latest Export Report, Australian wine exports during the 2021 fiscal year fell by 10 per cent in value compared with the previous ­financial year to $2.56bn, while export volume declined by 5 per cent to 695 million litres.

The key factors in the declines were the downturn in exports to mainland China following the imposition of tariffs and the cumulative effects of three consecutive lower vintages in 2018, 2019 and 2020 that meant there was less wine available to export.

Exports to mainland China were down 45 per cent to $606m. Total exports to China for third and fourth quarters of 2020-21 were $13m compared to $419m in 2019-20, prior to the imposition of tariffs.

Taylors Wines managing director Mitchell Taylor.

Australian wine is enjoying a renaissance in Britain, with exports to the UK at their highest level in a decade. The value of exports has increased by 23 per cent to $472m and volume by 16 per cent to 269 million litres, making the UK the biggest destination for exports by volume and the second by value. Exports increased to the UK, Singapore, South Korea, Malaysia, Taiwan and Hong Kong by a combined $240m.

Exports of Australian wine to Northeast Asia (which includes mainland China) was down 29 per cent at $909m, and to North America wine exports were down 5 per cent at $586m.

Taylors Wines managing ­director Mitchell Taylor, who pulled six containers of his wine off the ship destined for China last year when tariffs were announced and has not sold to the country since, said he had recorded improved sales to Britain over the past six months.

“It has been a strong market with the Covid lockdowns, and Australian wine is extremely successful in the off-premise supermarket part of the market,” Mr Taylor said “I think there has been a switch over from restaurants to the off-premise market.

“And the rest of Asia is going well too. Hong Kong has gone up quite a bit and there could be some grey market trading (into China) from that.”