China was previously Australia’s leading export market, with sales worth $1.2 billion in the year to September 2020.
However, Beijing then imposed a tariff of up to 218% on imported wine from Australia as a retaliatory measure after Canberra called for an international investigation into China’s handling of the Covid-19 outbreak in Wuhan.
Trade minister Simon Birmingham called it ‘a very distressing time for many hundreds of Australian wine producers, who have built in good faith a sound market in China’.
Beijing’s decision swiftly wiped out the market for Australian wine in mainland China. Exports had decreased 97% year-on-year by the end of 2021, according to Wine Australia.
The government-funded trade group has now seemingly abandoned hope of restoring a sizeable market in China. It has announced plans to close its Shanghai operation, which was its only office in the country.
‘This decision follows extensive consultation with the Australian grape and wine sector and is based on the current environment and market opportunity,’ a Wine Australia spokesperson said.
‘Wine Australia will continue to maintain our brand presence in China via our wine trade and consumer-facing social media channels, and will continue to work closely with in-market trade representatives on brand building and marketing campaigns.’
Australia has bolstered its presence in other markets, such as the UK and the US, but it has not been able to make up for the shortfall caused by Beijing’s punitive tariff.
The country’s total wine exports decreased by 30% in value to $2.03 billion in the year to December 31, 2021, according to Wine Australia.
‘The 2021 calendar year represents the first full 12-month period since very high deposit tariffs on Australian wine imported to China were imposed, and the global impact of the challenging operating environment can now be observed in full,’ said Rachel Triggs, general manager for corporate affairs and regulation at Wine Australia.
She warned that ‘we’ll keep seeing significant differences in the year-to-date export figures as a result of the deposit tariffs until the end of 2022’.
Hong Kong is not included in the tariffs, and exports to the city increased 45% last year. Exports are up by 108% to Singapore, 74% to South Korea, 65% to Taiwan and 31% to Thailand, so the Australian producers are likely to ramp up their focus on those markets.
Meanwhile, countries including Chile have enjoyed an export boost, replacing Australian wines on supermarket shelves across China.