Australian wine exports to China up 714%

Australian wine exports have seen remarkable growth over the past year, reaching their highest levels in three years in both value and volume, largely driven by a resurgence in the Chinese market following the removal of tariffs. In the 12 months leading up to September 2024, the total export value rose by 34%, reaching AUD 2.39 billion, while volume increased by 7%, totaling 643 million liters, according to the latest report from Wine Australia. This growth has been largely fueled by the return of exports to mainland China, which exceeded AUD 600 million, representing a AUD 604 million increase compared to the same period last year.

Since tariffs on Australian bottled wines were lifted in March 2024, exports to China have seen a notable recovery, with volume rising by 58%, equivalent to 59 million liters. Peter Bailey, Wine Australia's Market Insights Manager, explained that while the rebound in the Chinese market is impressive in terms of value, it likely reflects an initial phase of restocking following the prolonged absence of Australian wine in China, rather than a sustained increase in consumption. Bailey also pointed out that it is too early to gauge Chinese consumer reactions to the reintroduction of Australian wine, especially as global wine consumption has shown a downward trend due to growing health concerns and economic pressures.

The value of exports to mainland China surged by 714%, reaching AUD 612 million, making it the top market for Australian exporters during this period. However, Bailey emphasized that much of the wine exported to China falls into the premium price category, meaning the rise in sales does not help reduce the surplus of red grapes, particularly in warmer regions of Australia. Additionally, the volume of exports to China remains a small fraction of the total, highlighting the need for continued market diversification.

In contrast to the surge in the Chinese market, exports to other destinations remained stable in value at AUD 1.78 billion but saw a 3% decline in volume, totaling 585 million liters. The U.S. experienced the largest volume drop, down 21 million liters, largely attributed to a decline in bulk wine exports. In 2022 and early 2023, the U.S. had seen a boost in bulk wine imports due to competitive pricing, but this growth has since slowed, leading to the current volume decline. In terms of value, exports to the U.S. fell 7% to AUD 341 million.

The UK, which remains the leading market by volume for Australian wine, showed signs of recovery. Exports to the UK increased by 3% in value, reaching AUD 362 million, while volume also grew by 3% to 222 million liters. Although the average value of exports to the UK is lower compared to other markets, as most wine is shipped in bulk and bottled at the destination, this market remains crucial for Australian exporters. In fact, 90% of the volume of Australian wine sent to the UK is bulk wine, which affects the average price per liter, at AUD 1.63. However, the value of bulk white wine reached its highest level since 2007, indicating growing demand for these products in the UK market.

Elsewhere in Europe, export trends were mixed. Exports to Belgium rose by 49% in volume and 40% in value, while key markets like Germany and the Netherlands saw reductions in imports. In Germany, volume fell by 13% and value by 11%, reflecting challenges in this key market. Despite these difficulties, Australian exporters have found growth opportunities in markets such as Sweden and Denmark, where export values have risen, driven by demand for premium red wines.

In terms of wine styles, red wine exports saw the most significant growth, with volume increasing by 16% and value by 52%, reaching AUD 1.74 billion. The standout variety was Shiraz, with a 20% rise in volume, followed by Cabernet Sauvignon (up 11%) and Merlot (up 5%). Conversely, white wine exports showed a decline in volume, down 5%, while value remained stable with a slight 0.4% increase. Exports of Chardonnay, the leading white variety, fell by 3% in volume, while other white varieties such as Pinot Gris and Sauvignon Blanc also saw declines.

The sparkling wine segment experienced moderate growth, with volume up 9% and value increasing by 7%, totaling AUD 71 million. This growth was driven mainly by exports to New Zealand, Sweden, and mainland China, which have shown renewed interest in Australian sparkling wines.

In terms of pricing, the report noted growth across all price segments. Wines priced under AUD 5 per liter rose 4% in value, reaching AUD 970 million, while wines priced above AUD 5 per liter grew 66%, fueled by exports to China, Hong Kong, and Canada. Notably, wines priced over AUD 20 per liter saw a 159% increase, reaching AUD 105 million.

Despite these encouraging results, challenges remain. According to Trade Data Monitor, the top 10 wine-exporting countries saw a 3% decline in total export volume in the year leading up to June 2024, reflecting a global trend of moderating alcohol consumption, driven by economic and geopolitical pressures. For Australian exporters, the need for market diversification is becoming increasingly evident, especially as key markets like the U.S. and Canada show signs of saturation and declining demand.