The Australian wine industry is already reaping the benefits of China lifting trade tariffs on wine exports into the country.
Over the past two years, the Australian wine industry, especially the commercial sector in key growing regions, has faced significant challenges.
These include a multi-year tariff imposed by China that halted all bottled wine exports, ongoing impacts from COVID-19 affecting supply chains and costs, an economic environment of reduced consumer spending, declining global wine consumption, and shifting consumer preferences towards
premium wines.
In November 2020, China imposed provisional tariffs, ranging from 107 per cent to 212 per cent, on Australian wine.
The impact on the Australian wine market was huge. Prior to the tariffs, China was Australia’s largest wine export market, with exports valued at over $1 billion annually.
The Australian wine industry faced significant economic losses due to the reduced access to the Chinese market. Many producers sought alternative markets and increased efforts to promote Australian wine in other regions.
China investigated allegations of dumping and subsidisation, claiming that Australian wine producers were selling wine in China at unfairly low prices, while the Australian Government strongly denied the dumping and subsidy allegations, describing the tariffs as unjustified.
Before aiming to resolve the issue through diplomatic channels and by appealing to international trade bodies.
As a result, the March announcement was a hugely welcome one to the Australian wine industry.
Wine Australia welcomed the announcement at the time, with CEO Dr Martin Cole highlighting the importance of continued relations between the Australian and
Chinese markets.
“Mainland China remains an important market for the Australian wine sector,” he said.
“Over many years, Australian wine companies have developed close relationships with importers, buyers and consumers of Australian wine in China and these relationships remain important to our wine community.
“Pleasingly, we know that trade and consumer sentiment for Australian wine in China remains positive.”
Some wineries, including Barossa’s Curator Wine Co, are projecting export growth of up to 60 per cent by the end of 2025 following China’s re-emergence.
The China wine export market was valued at $946.5 million per year at its peak and accounted for nearly half of the state’s wine exports before tariffs were introduced.
Meanwhile, exports to China across all categories have grown by 39 per cent over the 12 months to March.
In that same period, South Australia was the only state in the country to see its global exports grow in that time, up three per cent to $17.7 billion, compared with a national decline of 10 per cent.
Within just one month of the tariffs being lifted on bottled wine, Australia exported $86 million of quality wine to China, according to Minister for Trade and Tourism, Senator the Hon Don Farrell.
With South Australia accounting for $80 million of that.
As a sign of the advantages of the tariffs being lifted, Treasury Wine Estates (TWE) provided a market update on its Penfolds business and China strategy.
TWE CEO, Tim Ford, said it was fantastic to see local Chinese consumers reignite their passion for Penfolds’ great Australian luxury wines.
“We are delighted to be bringing more of our Australian luxury wines back to China, at a time when the luxury wine market presents significant long-term growth opportunities for Penfolds and the wine category overall,” said Ford.
“By leveraging our unique Penfolds brand status to drive ongoing demand, we remain steadfast in our clear ambition to be the number one luxury wine brand in the market.”
Penfolds MD, Tom King, added that Penfolds’ portfolio of globally sourced luxury wines continued to provide consumers from across China with access to wines from the world’s most revered wine regions such as Australia.
“The power of Penfolds to engage with consumers across four countries of origin is truly unique,” said King.
“Our most recent Penfolds China wine releases have received excellent praise from wine critics and present an incredible opportunity to drive further connection and engagement with our consumers in China, and to become a global ambassador for Chinese
luxury wine.
“Similar to the roadmap we have followed in France, we continue to explore further winemaking opportunities in China, including investing in local sourcing and production opportunities to support future portfolio growth opportunities.”
Australian Grape & Wine chief executive Lee McLean also welcomed the news that the lifting of import duties into China was already having a
positive impact.
“This is a very important decision for the Australian wine industry. It reflects the positive outcome of diplomatic efforts by the Albanese government to stabilise relations with China and underscores the importance of collaboration between government and industry,” said McLean.
“We acknowledge and thank Foreign Minister Penny Wong, Trade Minister Don Farrell and Agriculture Minister Murray Watt and their respective departments for their steadfast support of Australian grape growers and winemakers throughout the process.”
The presence of Australian wines in China will continue to complement the local wine industry, providing consumers with a broader selection of premium wine options.
“The Australian wine sector has made a long-term commitment to building the market for Australian wine in China, with many wine companies having developed close relationships with importers, buyers and consumers of Australian wine over many years,”
said McLean.
“We are working closely with the Australian Government and Wine Australia to ensure a coordinated approach is taken to re-entry and that the sector is well positioned to re-establish trade relationships.
“We look forward to seeing Australian wines back on Chinese dining tables and rejuvenating our relationship with customers and business partners in that market.
“We will also, however, be maintaining our focus on diversifying our export footprint and growing demand here in Australia as well.”