Australian wines sparkle again in China on eased ties

Australian wine's renewed access to the Chinese market has not only provided a much-needed boost for the sector, but has also underscored the importance of fostering robust trade relationships to sustain growth and competitiveness, analysts said.

The total export value of Australian wines was 2.2 billion Australian dollars ($1.48 billion) during the previous fiscal year — from July 1, 2023 to June 30, 2024 — up 17 percent year-on-year, according to a report released by Wine Australia, the Australian government's statutory authority that promotes and regulates its wine industry.

The surge in Australian wine exports during this period, as shown by the report, has been largely attributed to a pivotal policy change by China in March, when tariffs on Australian wines were lifted.

On March 28, the Ministry of Commerce announced the termination of anti-dumping and anti-subsidy duties on imported Australian wine, effective March 29.

Tariffs of up to 212 percent were originally introduced by the ministry in November 2020. A final ruling the following March set anti-dumping and anti-subsidy duties of between 116 percent and 218 percent for a five-year period.

Simultaneously, China and Australia submitted a notification to the World Trade Organization's Dispute Settlement Body of a mutually agreed solution on discontinuing these punitive tariffs.

This led to an upswing in Australian wine exports to the Chinese market from April to June, propelling the Chinese mainland to become the number one export market for Australian wine in terms of value, and number four in terms of volume during the last fiscal year, the report revealed.

Between April and June, 31 million liters of wine valued at $389 million were exported to the Chinese mainland.

This resulted in Australian wine exports to the destination increasing from 1 million liters valued at $8 million in the fiscal year before the last, to 33 million liters valued at $400 million in the previous fiscal year, according to the report.

"The restored access to one of the world's largest consumer markets for wine has rekindled prospects for Australian wine producers, enabling them to once again tap into the immense potential offered by Chinese consumers," said Bai Ming, a researcher at the Chinese Academy of International Trade and Economic Cooperation.

Moreover, the improvement of trade ties between Australia and China serves as a poignant reminder of the mutual benefits that accrue from fostering open, cooperative trade environments that facilitate the free flow of goods and services, Bai said.

However, despite the impressive growth in exports to China, the expansion still represents only a fraction of the historic peak levels witnessed in the market, analysts said.

Changes in wine consumption patterns, particularly in the realms of business banquets and gift-giving, have led to a marked reduction in wine drinking, resulting in a notable shrinkage in the market as a whole, said Guo Songquan, a wine industry analyst.

According to a report by International Wine and Spirits Record, the consumption of domestically produced wine in China plummeted from 95 million cases in 2017 to 27 million cases by 2023, while sales of imported wine dropped from 61 million cases to less than 20 million cases over the same six-year period.

Collectively, the consumption of both domestic and imported wines in the Chinese mainland now stands at less than one-third of levels recorded six years ago, according to the report.

The reentry of Australian wines into the Chinese market is not expected to significantly alter the overall Chinese wine market.

However, given the finite size of the market, any gains made by Australian wines might come at the expense of competitors like French and Chilean wines, Guo said.

The degree of impact will be determined by the marketing efforts of Australian wine brands and the responsive measures adopted by other countries in the industry, Guo added.