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Australian wine exports fall as China tariffs bite  

A sharp drop in the value of exports to China over the past year has overshadowed stronger demand from some other parts of Asia and also the US, new figures show.

Australian wine exports dropped by 19% to A$2.08bn in the year to 30 June, said trade body Wine Australia this week.

While exports to some countries rose, notably the US, the group’s report for the 2021-22 financial year offered fresh insight into a slide in shipments to China.

Mainland China imposed varying import tariffs ranging from 116% to more than 200% on Australian bottled wines from late 2020 onwards.

Exports to China, including Hong Kong and Macau, dropped by 74% in the 12 months to 30 June 2022, to A$206m, said Wine Australia, which recently announced plans to close its physical office in Shanghai.

Shipments to mainland China totalled just A$25m for the year, and the number of companies exporting to the mainland fell to 143, compared to 1,508 in the previous year.

‘The loss in value of exports to mainland China, from its peak in [the year ended] October 2020 to the latest 12-month period, has been A$1.23bn,’ said Wine Australia’s latest export report.

‘In comparison, over the same time period, exports to the rest of the world have increased by $247 million,’ it said.

China’s Ministry of Commerce confirmed the import tariffs on Australian wine last year, citing an anti-dumping investigation.

They could be in place for five years, but Australia and China are currently engaged in a dispute process at the World Trade Organisation.

Australia’s new government recently took office and some reports have noted warmer rhetoric between the two nations, yet it’s early days.

Penfolds owner Treasury Wine Estates (TWE) has said it remains committed to China. In May, it announced plans to release Penfolds wine made in China onto the domestic Chinese market in the second half of calendar 2022.

‘China is an emerging fine winemaking region and we’re confident we can produce a premium Chinese Penfolds that maintains the distinctive Penfolds house style,’ said TWE’s CEO, Tim Ford.

Produced in the Ningxia region, it’s part of a wider ‘multi-country of origin’ strategy for Penfolds, but tariffs were understood to have accelerated the China project.

TWE has also signed a long-term ‘strategic co-operation agreement’ with the China Alcoholic Drinks Association (CADA).

Australian wine in the rest of the world

Some countries showed stronger demand for Australian wine in the year to 30 June.

‘When mainland China is excluded from the data, exports increased by 5 per cent in value to A$2.06 billion,’ said Peter Bailey, Wine Australia manager, market insights.

‘The key contributors to the value growth included Singapore, the United States (US), Malaysia, Thailand, India and New Zealand.’

Exports to the US rose by 9% to A$436m, making it Australia’s most valuable wine export market. Shipments to Singapore jumped by 49% to $169m.

Australian wineries have turned a corner in the US, said Aaron Ridgway, Wine Australia’s regional general manager for the Americas. ‘The number of active exporters has expanded to a 15-year high,’ he said.

Exports to the UK dropped by 10% to A$421m and by 15% in volume, to 227m litres. Yet the country was still the second biggest export market for Australian wine by value, and the largest by volume.

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