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Australia feels impact of Chinese tariffs on wine

Published:  04 August, 2021

The impact of the Chinese tariffs on Australian exports will not be immediately offset by other markets, the latest Australian Bulk Wine Market Update has said.

It added: “This will take some time and with likely downward pricing adjustment for red wine previously destined for China.”

The figures go some way to demonstrate just how abruptly sales have tailed off since October when the tariffs were first announced – a punitive measure taken by the Chinese government after it accused Australia of dumping cheap wine in the country.

Another report from Bloomberg has also recently highlighted the impact of the tariffs, which will add 200% to the price of Australian wine for five years from March 28 2021.

According to the report, imports of Australian wine will incur anti-dumping levies of between 116.2% and 218.4%. Duties on Treasury Wine Estates, Australia’s largest listed winemaker best known for its Penfolds brand, are set at 175.6%.

Clearly, it will take time for exports of Australian wine to readjust after losing China, previously its biggest export market by value (31%) followed by the UK (17% - Wine Australia figures to December 2020). 

The Australian Bulk Wine Market Update’s figures follow a recent Wine Australia Export Report in July which showed that overall Australian wine exports declined by 10% in value to $2.56bn in 2020–21 compared with the previous financial year, while export volume declined by 5% to 695 million litres (77 million nine-litre cases). 

One of the key factors in the decline was the downturn in exports to mainland China following the imposition of tariffs, said Rachel Triggs, general manager for corporate affairs and regulation at Wine Australia.

“Exports increased to the UK, Singapore, South Korea, Malaysia, Taiwan and Hong Kong by a combined $240m, but they did not offset the decline in exports to mainland China,” said Triggs.

“However, excluding mainland China, exports increased by 12% in value to $1.96bn and increased by 6% in volume to 643 million litres.”

It was not all bad news for Australian exports, however. Value of exports to the UK increased by 40% to $255m in the first half of the financial year and by 8% to $218m in the second half.