Australian wine exports set to drop off the back of coronavirus fears

COVID-19 is wreaking havoc on China — not to mention wine sales there. And consequently it’s disrupting Australia’s export-dependent wine industry.

CORONAVIRUS has overtaken international trade barriers and a global trend of declining alcohol consumption as the biggest disrupter to Australian’s export wine industry.

Rabobank’s quarterly wine report, released last week, has revealed COVID-19 is wreaking havoc on China, not to mention wine sales there, as trade between the two nations slows and the Chinese Government cautions its citizens against social gatherings and visiting restaurants.

Rabobank senior analyst Hayden Higgins said the fallout from coronavirus would be largely unknown for another month until China released its import volumes and a better picture could be gleaned of Australia’s exports that managed to make it into China.

“Coronavirus has continued to evolve daily and we’re seeing all sorts of measures being put in place,” Mr Higgins said.

“We’re predicting a significant global economic slowdown and that plays into an environment where consumers may trade down into lower cost wines as disposable incomes change. Consumption may change and where they spend their money may change until the economy returns to a growth phase in 2021.”

Mr Higgins predicted the first half of this year would be particularly challenging for Australian wine exporters, reflecting the impact of coronavirus on China.

Major Australian wine exporter Treasury Wine Estates has already forecast a “significant” hit to its sales in China as the country bunkers down in fear of catching the virus. It’s not the only Australian wine exporter with concerns about the year ahead, given that 44 per cent of Australian-made wine sent offshore is destined for China.

The downturn, however, follows a recent boom in wine values to China. Despite a 17 per cent decline in wine volume sold there, sales increased in value by 12 per cent.

Mr Higgins said the push into the premium space showed the marketing push had been working.

While Australian bulk wine exports declined 12 per cent last year in volume, they rose 3 per cent in value, and bottled wine exports dived 5 per cent in volume but increased 7 per cent in value.

The standout category was wine priced above A$20 a litre, where exports increased in value by almost 30 per cent in 12 months.

Australian Grape and Wine Australia chief executive Tony Battaglene said there were strong sales in the premium wine category in China before the coronavirus outbreak.