The downturn in exports to mainland China following the imposition of tariffs has hit overall exports; as has the cumulative effects of three consecutive lower vintages in 2018, 2019 and 2020 (meaning less wine was available for export).
Exports to the UK, however, are at their highest level in a decade: having increased in value by 23% over the last year to $472m. Exports to Singapore, South Korea, Malaysia, Taiwan and Hong Kong also increased.
China tariffs hit Australian wine industry
Mainland China represents an important market for Australia’s wine exports, remaining the largest market by value even after this year's decrease.
In 2020-21 it dropped by 45% in value to $606m; while in volume terms, it dropped 57% to 52 million liters.
“Since the imposition of import tariffs, exports of Australian wine to mainland China have dropped dramatically," notes Wine Australia. "Total exports for Quarters 3 and 4 in 2020–21 were $13m compared to $419m in 2019–20, prior to the imposition of tariffs.”
Outside of mainland China, however, it is a more positive story. Excluding this market, exports actually increased by 12% in value to $1.96bn and 6% in volume to 643 million litres.
The UK marks Australia’s largest market by volume and second largest by value.
“The growth in exports to the UK was much stronger in the first half of the year, due to the surge in wine sales in the off-trade sector spurred by the COVD-19 related shut-down of the on-trade as well as some exporters sending wine into the market ahead of Brexit. Exports to the UK increased by 40% to $255m the first half of the financial year and by 8% to $218m in the second half. While growth in the second half was at a much lower rate, the growth in Quarter 4 (up 10%) was stronger than Quarter 3 (up 6%).”
The US, meanwhile, is the second largest market by volume and third largest by value: although took a hit in 2020-21.
“Exports to the US declined 7% in value to $400m and by 8% in volume to 127 million litres.
“Most of the decline in export value came in Quarter 4, with value falling by $31m compared to the same quarter in 2019–20. The decline is the result of several factors. Firstly, there was a substantial increase in exports in Quarter 4 in 2019–20, which was a reflection of the COVID-19-related surge in off-trade sales in the US when the on-trade sector was shut-down. This year, with the on-trade re-opening and the off-trade returning to more normal activity, there was counter-swing. As a result, exports declined.
"Secondly, some exporters had less volume available to export and this was most visible in Quarter 4 as stock levels were unable to support growth.”