Australian wine exports to China jump back above $1b but US market proving to be a challenge

Australian wine exports to mainland China have jumped back above $1 billion, one year after onerous tariffs of as much as 200 per cent were removed.

Exports to the Middle Kingdom grew $1.01b to $1.03b in the 12 months to the end of March, according to fresh figures from industry body Wine Australia on Tuesday.

Just under 100 million litres of wine were exported to China over the period as major local players, like Penfolds owner Treasury Wine Estates, resumed shipments.

China last March dropped a crippling tariff of more than 200 per cent on local wine producers four years earlier. It was introduced alongside imposts on barley and coal in retaliation to questions from the Australian Government about the origins of COVID-19.

Wine Australia said overall exports grew 41 per cent in value to $2.64b and by 6 per cent in volume to 647 million litres in the past year.

The group’s market insights manager Peter Bailey said the increase in average value was due to the elevated level of premium wine shipments to mainland China.

“While the total value of shipments to mainland China is now at a similar level to the years immediately before tariffs on Australian bottled wine came into force, volume in the last 12 months is 23 per cent smaller than the five-year average between 2016 and 2020 and 44 per cent below the peak in 2018,” he said.

“Additionally, the average value of packaged wine shipped to mainland China was $23 per litre, much higher than any other major export market.

“The lower volume and high average value demonstrate that mainland China is a premium market for Australian wine and will therefore not solve oversupply issues in Australia.”

But the US market is proving to be a challenge, with wine exports to the country declined $32m to $323m in the year to March — the lowest level since the early 2000s.

This was even before US President Donald Trump slapped a 10 per cent tariff on all Australian imports, including wine.

“The global wine market is facing considerable headwinds which are impacting on results for other markets,” Wine Australia said.

“Escalating trade wars have the potential to increase prices, complicate supply chains, and rapidly change the competitive landscape in key wine markets in the near-term.”