In what appears to be a major change in fortune, the US has now become the top export destination for Australian wine, while exports to the UK and China, which used to be the country’s major markets, dwindled.
Overall, however, export of Australian wine has slipped by 4% to A$1.94 billion (US$1.3 billion) in 2022. This is remarkably distant from the high of A$2.82 billion (US$1.88 billion) achieved in 2018.
The high tariffs, ranging from 116-218%, imposed on Australian wine into China has directly contributed to the market being almost non-existent to Australian wine producers. Exports to China fell by another 58% to just A$12 million (US$8 million). This is dismal if compared to A$1.17 billion (US$780 million) achieved in 2019.
The Australian Government and wine industry organisations have been trying to boost exports to the US in a bid to fill the large gap left by China, once Australia’s largest wine export market.
Meanwhile, exports to Southeast Asia grew 16% to A$305 million (US$203.4 million), with all countries in the region buying more Australian wine apart from Singapore, where sales dropped 20% to A$132 million (US$88 million). The tiny city-state is however the largest market for Australian wine in the region.
With the recent opening of China market, several major wine producers are eyeing for a possible return of trade into China. One of them is Treasury Wine Estates (TWE). TWE is banking on a better relationship climate between both countries with the upcoming visit by the Federal Trade Minister Don Farrell to China. TWE is hoping for relief on the high tariffs, as it is planning to release its inventory of upmarket Penfolds brand favored by the Chinese consumers should this come to fruition.
Nevertheless, TWE has been fast to respond to the market closure by stepping up plans to export Penfolds and other brands from the US and Europe into China. It is also working into the development of China-made Penfold wine to cater to the domestic demand.
China is now the 6th largest market for wine and the world’s largest importer of red wine.