Growth was seen across all price points, from entry level through to fine wines. The value of wine exports increased by 63% to $848m AUD ($676m USD) and volume by 54% to 153 million liters. The average price increased by 6% to $5.55 ($4.42 USD) per liter FOB.
“Australian wine has experienced outstanding growth in exports to mainland China over the last decade,” says Wine Australia as it released its 2017 export figures this week.
“The implementation of the China–Australia Free Trade Agreement in 2015 provided impetus to an already strong market. The export figures for 2017 suggest Australia is well-placed for this trend to continue.”
Trade agreements and growing middle class consumer base
China overtook the US to become Australia’s top market for wine exports (by value) in 2016, a position it maintained in 2017. A little over a decade ago, exports to China were valued at just $27m AUD ($21m USD): today that has reached $848m AUD ($676m USD).
The China-Australia Free Trade Agreement, which cut import duties, is credited as a key factor for growth, along with a growing Chinese middle class with an increased interest in wine.
China now makes up 33% of total Australian wine export value: well ahead of the other top export markets of the US (18%), UK (14%), Canada (7%) and Hong Kong (5%).
In volume terms, it is the third largest market, after the UK and US.
Australia is the second biggest wine exporter to China, coming in after France.
Key trends in the Chinese wine market
- An expanding market, including around 48m urban upper-middle class drinkers of imported wine
- Consumers with a growing disposable income
- Shift towards people purchasing wine for themselves, rather than a gift
- A younger and more diverse wine drinking population
- Continued growth in red wine sales, with consumers typically favoring fruit-styled, softer wine with lower tannin & acidity
- Developing demand for white wine, particularly Riesling, Sauvignon Blanc, Chardonnay, Moscato
- More interest in online purchasing
- Regional variations in wine preferences
Source: Wine Intelligence/Wine Australia
Total wine exports from Australia were up 15% to $2.56bn AUD ($2bn USD) in 2017, the highest annual growth rate since 2004. Volumes were up 8% to 811 million liters. Growth in higher value wines was also evident with the average value of exported win up 7% to $3.16 per liter.
Exports to Northeast Asia increased 47%, topping $1bn AUD for the first time. Exports to Southeast Asia increased by 2% to $165m, and those to the Oceania region were up 8% to $94m.
Wine exports to North America decreased by 2% to $636m AUD ($5.7m USD), although higher value exports (more than $10 AUD per liter or $14 USD per bottle in retail) increased 8% to $45m ($36m).