Australian wine exports slow due to China tariffs

Australian wine exports slowed in the 12 months to December 2020, decreasing by one per cent in value to $2.89 billion, as Chinese tariffs took their toll on exports to that market.

Wine Australia's latest Export Report reveals there was a 0.5 per cent increase in volume to 747 million litres and a one per cent decline in average price to $3.87 per litre free on board (FOB).

Wine Australia chief executive officer Andreas Clark said that despite the COVID-19 pandemic, exports hit a record year-on-year value of $3.1 billion in the 12 months ended October 2020, before recording a steep decline in the final two months of the calendar year.

The previous year-on-year high point had been $3 billion reached in 2007.

Mr Clark said that there had been a sharp increase in exports from August to October, primarily to mainland China and the United Kingdom, while the decline in November and December was predominantly in exports to China.

He said unsurprisingly, exports to mainland China were immediately down following the imposition of the temporary tariffs in November.

The sharp decline in export volumes and value in the final two months of the year saw the overall value for 2020 decline by 14 per cent to $1.01 billion and volume drop by 29 per cent to 96 million litres.

It was expected that exports to China would remain low in coming months affecting total export numbers during 2021.

However, the report found decline in exports to China had been offset by significant growth in exports to Europe, up 22 per cent to $704 million — the highest value in a decade.

There was also growth in North America, up four per cent to $628 million, and Oceania, up 11 per cent to $115 million.

“Wine businesses are resilient and are already adapting to these changed market conditions, increasing their engagement in markets other than China, particularly the UK, USA, Canada and the domestic market,” Mr Clark said.

He said there was a decline in value across most price points with the notable exception of exports under $2.50 per litre FOB, which grew by 17 per cent, driven by increased shipments to the UK, New Zealand, Scandinavia, Germany and Canada.

The top five markets by value were China, down 14 per cent to $1.01 billion; United Kingdom, up 29 per cent to $456 million; United States, up four per cent to $434 million; Canada, up five per cent to $192 million; and Hong Kong, up 27 per cent to $132 million.