Lower-priced imports fuel Australian wine rebound in China

Australian wines have regained some ground in China in the past year, driven by rising demand for lower-priced wines, show new figures.

Exports of Australian wines to China rose by 8% in volume in 2014, to 40m litres in 2014, according to Wine Australia. The increase follows a 16% drop in exports in 2013.

Australian wines also reversed 7.6% drop in the value of exports sent to China in 2013. Last year, exports totalled A$224m (US$177m) versus A$223m a year earlier.

Although Australian wines have commanded relatively high average prices in the Chinese market in the past few years, it was demand in the middle and lower end of the market that fuelled last year’s growth.

Wines priced between A$2.50-$5 were the ‘key driver’ to the ‘turnaround’, with exports in the category up by 15% in volume to 20m litres.

For five years, Australian wine exports to Asia rose by an average 16% annually, with the Chinese market showing significant growth in both exports volume and value, until the government austerity measures were introduced in late 2012. Those policies have damaged demand for higher-priced wines, but many believe the market is moving into a more sustainable place as a result.

‘During that period, it was hard to know whether the wine was being drunk,’ Wine Australia’s chairman, Brian Walsh, told DecanterChina.com, commenting on the market boom for high-end wines.

Based on the bilateral trade agreement signed by both countries late last year, China is set to abolish the import tariffs to Australian wines within 4 years.

Currently, Chinese customs places a 14% tariff on imports of Australian bottled wine and a 20% tariff on bulk wine.

Price-wise, the move is expected to put Australian imported wines ‘on an equal footing’ with their New World competitors such as Chile and New Zealand, said Walsh.