Australian wine is making a return to Chinese shelves, sparking optimism among exporters as sales see a significant boost. However, the industry remains cautious about the long-term prospects in a market that has undergone significant changes since China’s government imposed severe tariffs on Australian wine four years ago.
According to recent trade data from the Australian Bureau of Statistics (ABS), South Australia, the nation’s largest wine-exporting state, shipped over $343 million worth of wine to China in the three months following the lifting of trade restrictions in late March. This resurgence contributed to a 19% growth in South Australia’s wine exports, which made up two-thirds of the total value of the country’s wine exports for the last financial year—$1.56 billion out of a national total of $2.3 billion.
The return to the Chinese market is a dramatic turnaround from the situation in November 2020, when China imposed tariffs exceeding 200% on Australian wine. By 2023, exports had plummeted to just 1.4 million liters, valued at $10.1 million, a far cry from the peak of 121 million liters worth $1.3 billion in 2020. The number of Australian wine exporters to China also dropped sharply, from 2,198 to just 117.
The removal of tariffs this March led to a dramatic spike in sales, pushing national wine exports to China to $400 million and 33 million liters in the last financial year.
Lee McLean, CEO of Australian Grape & Wine, acknowledged the strong initial results but emphasized that the Chinese market has evolved significantly in recent years. “It’s important to assess the market with a clear perspective,” he said. “While China will remain an important market for Australia, it’s unlikely that we’ll return to the $1.2 billion annual export levels we saw before the tariffs.”
McLean also noted that the resumption of trade with China wouldn’t resolve the immediate issue of wine oversupply in Australia. Last August, Rabobank estimated that it would take at least two years to work through the surplus, with 2.8 billion bottles currently in storage.
Peter Bailey, Wine Australia’s manager of market insights, stated that the oversupply, particularly of red wine, remains around 400 million liters. While China is a strong market for red wine, much of the surplus comes from large inland production regions like the Riverland, Riverina, and Murray Darling, where wines are typically at the commercial price range. In contrast, the wines currently being exported to China are largely premium products.
Bailey also cautioned that while the export figures are promising, they don’t necessarily reflect actual retail sales. “It will take time to determine whether this is sustainable demand or simply a restocking effort,” he said. The upcoming export figures for the September quarter, to be released in October, will provide further insight into whether Australian wine is gaining traction with Chinese consumers.
To bolster these efforts, Wine Australia is organizing a roadshow in China later this month, featuring 50 exhibitors and 140 brands in key cities like Beijing, Shanghai, Guangzhou, and Chengdu. Additionally, South Australia’s Trade Minister Joe Szakacs is leading a delegation to China this week to engage in business and government meetings aimed at promoting the state’s wine, seafood, agribusiness, and technology sectors.
