Wine exports to China plunged 45% over the year to June 30, 2021, from the year-earlier period after steep tariffs were imposed on Australian wine, but bounced higher in Hong Kong. Exports remain dominated by Shiraz, Cabernet Sauvignon and Chardonnay, as French varietals remain the dominant grapes grown in the nation despite talk of ‘alternative’ varietals gaining ground.

The good news is that those Chinese tariffs do not apply to Australian wine exports to Hong Kong, which has an independent tax system from China. The former British colony could become a back-door entry for wine into the mainland, Bloomberg reports, as appears to be the case with Australian rock lobsters, which saw exports to the city explode more than 2,000% after China banned Australian imports in 2020. Shipments to the city rocketed 111% in the 12 months ended June 30, to $187 million ($136.7 million), and average value per litre also jumped 65% to $22, according to data from Wine Australia’s Export dashboard.

This new website from Wine Australia provides interactive and comprehensive data and insights on Australian wine exports and production. The Export dashboard provides insights on Australian wine exports back to 2010.  The data for the year ended June 30, 2021, provides a sombre picture of the impact of the Covid-19 pandemic and the impact of wine tariffs imposed on Australian wine by China, Australia’s largest export market for wine – and most commodity and agricultural exports.

Wine Exports for the 12 months ending 30 June 2021

The National Vintage Survey dashboard is a one-stop—data-shop for Australia’s vintage crush data from 2015 to the latest report.  This dashboard provides vintage crush figures by volume and value, detailed tables on crush by variety and region, as well as average weighbridge purchase value by variety and region including price dispersion. All data can be downloaded in Excel form, while the dashboard can also be downloaded to PDF. 

The data comes from the National Vintage Survey, which is the annual winegrape crush and weighbridge price survey conducted by Wine Australia on behalf of the Australian wine sector.  

The Australian wine market has been hit hard by the imposition of tariffs on its wine and selected producers. The chart below shows the exports plummeted 45% from the 12 months ending 30th of June 2020. On 26 March 2021, China announced final decisions on its anti-dumping (AD) and countervailing duty (CVD) investigations into wine from Australia. The AD duties – in the range of 116.2% to 218.4%, with the rate varying by supplying company – will apply to wine in containers of 2 litres or less, excluding sparkling wine for five years from 28 March 2021.

Read here for more details. 

Australia exports wine to over 100 markets, but in 2020 the top 5 markets (Canada, China, Hong Kong, United Kingdom and United States) accounted for 75% of total wine export volume and 77% of export revenue. China was the largest in value terms, accounting for 33% of export revenue and ranking third in volume (after United Kingdom and United States) at 13%. However, for bottled wines specifically, China was Australia’s largest market in value and 2nd largest in volume, with 40% of the export value share and 24% of the export volume share.

Wine exports 12 mths to June 30, 2021 (pink bar), versus year-earlier period

In the medium term, altered production decisions and diversion to other markets will lessen the impact of China’s duties. But modelling from the Australian government shows the gross value of wine production in 2025 also being $480 million lower than would otherwise be the case without China’s AD duties, due to reduced production combined with a lower expected average price. This would result in a loss of around $67 million to wine grape growers, equivalent to a 6.7% loss of the gross value of production of wine grapes.

Another potential future market for Australian wine in Asia is India, where wine is a relatively new and unknown beverage but showing potential. However, all countries currently face a 150 per import tariff on wine exported to India, which is a significant deterrent for consumers, according to this report from Wine Australia.

Another is South Korea,

According to Wine Intelligence, South Korea in 2021 is the second most attractive wine market in the world, following the US, a significant up-shift from the tenth position it held in 2019. The South Korean wine market was valued at US$895 million in 2019. While the market size is relatively small , the only countries that recorded stronger growth rates over the last five years were Russia, India and the United Arab Emirates. Growth in volume has been seen across all major wine export countries to South Korea, and the value per bottle of still and sparkling wines has also seen an increase.

According to the Global Compass 2021 Report, an annual study that measures key economic and wine market factors to rank wine’s attractiveness in 50 focus countries, the US’s strong economic rebound, partly funded by government stimulus, kept it ahead , said Lulie Halstead, CEO at Wine Intelligence.

“However, #2 South Korea is gaining fast in our model. Wine growth in the US is tailing off, whereas still wine volume in South Korea grew by more than +11% CAGR 2016-2020, according to IWSR Drinks Market Analysis,” she said.