China tariffs: Australian wine exports down 26 per cent

Chinese tariffs are crippling the Australian wine industry, as new data shows annual exports are down by more than $700 million.

Australian wine exports are in free fall, down 26 per cent following a year without Chinese sales, a global freight bottleneck and wine stockpiling in the early days of the pandemic.

Wine Australia’s latest export report reveals in the 12 months to March 30, the value of Australian wine exports were down to $2.05 billion.

The report said exports declined in all price categories, but the largest loss was in the $50-$100 a litre segment, which was driven by the loss of China.

This was closely followed by the $2.5-$7.49 category, which reflects declining sales in the US, the UK and Canada.

In the 12 months to March 2021, export wine sales were down 4 per cent to $2.77b.

Wine Australia’s Rachel Triggs said the loss of China, which imposed crippling tariffs on most Australian wine of more than 200 per cent in November 2020, amounted to about $844m in lost sales over the period.

Schild Estate has lost a significant amount of sales in the past year due to tariffs imposed on Australian wine by China, which used to represent 10 per cent of the winery’s market.

Excluding mainland China, exports increased in value by 7 per cent to $2.03b due to growth in Singapore, Hong Kong, Thailand, South Korea, India, Japan and Taiwan.

“Over the past 15 months, Australian wine exporters have had to navigate through an exceptionally challenging operating environment, largely led by the imposition of high deposit tariffs on bottled Australian wine imported to mainland China, the continuing impact of the global freight crisis, and a counter-swing in some markets after Covid related stockpiling in 2020,” Ms Triggs said.

Prior to Covid, export accounted for half of Barossa Valley winery Schild Estate’s sales.

The family-owned winery, which has 11 vineyards and ordinarily produces about 40,000 cases of Schild Estate wine, has continued to export over the past two years, but shipments have been beset by delays at port.

Schild Estate chief executive Sue Henderson said China used to represent about 10 per cent of sales. While that market has disappeared, modest gains in Taiwan, Hong Kong and Canada have acted as a small buffer.

“The majority of our customers are buying less than they have in the past. But I feel we’ve turned the corner, we’re past the bottom,” Ms Henderson said.

Some of Australia’s biggest winemakers have bought-out grape contracts, rather than take the grapes for wine, to manage soft demand, both overseas and domestically.

Many red wine grape growers geared for the Chinese market have been leaving their fruit to rot rather than searching for buyers or accepting prices that are less than half of what they were last year.

Speaking from the UK, Australian Grape and Wine chief executive Tony Battaglene said the nation was headed for a medium-term supply imbalance, with the only way out being diversification after years of over-reliance on China.

“There are winners and losers, if you’re in Victoria with prosecco and pinot noir you’re getting good prices and demand,” he said.