Export of Australian produce has been hit on all sides lately, with the Covid pandemic, catastrophic floods and the war in Ukraine having effects that flow through all aspects of global shipping. On top of all that, there are specific issues with both the UK and China adding to the adverse impact faced by our wine exporters.
Australian wine exports plunged by more than a quarter in the year to the end of March, as Chinese duties, global shipping chaos and sluggish demand following Covid stockpiling took their toll. The industry’s attempts to invigorate particularly the North American market also seem to be falling flat to date, with the value to the UK, US and Canada all in decline.
The United Kingdom
The British government has slapped a tax on wines with a higher alcohol content, making our wines less competitive and wiping out the gains promised by the recently-signed Free Trade Agreement (FTA). The new tax means 93% of Australian wines sold to the UK will increase in price.
The UK is our fastest growing wine export market. Latest figures show we shipped 251 million litres, worth A$460m, to Britain last year. As part of the FTA, our wine exporters were anticipating a A$50m reduction in tariffs but, instead, they now face a A$150m penalty. The Australian industry was pinning its hopes on a resurgence in exports to the UK to counter the A$1bn shortfall from China after their imposition of new taxes.
Mainland China
Year-on-year exports to China last financial year have collapsed by nearly 96% – or A$1 billion – to only A$29m for the 12 months to the end of December. This represents the first 12-month period since very high tariffs on Australian wine imported into China were imposed.
It was only just before Covid-19 emerged that Australia hit $1.1 billion of wine sold into China and drinkers there made wine from Down Under their favourite drop, displacing those from France as the country’s most sought after.
2021 did see an increase in exports to Hong Kong, which were up 45% at A$192m, and Singapore, which were up 108% at A$166m. A spokesperson for Wine Australia acknowledged that the industry was also being hit by other challenges, including supply chain and global issues resulting from Covid-19, but says the latest figures show that the wine export community is “managing its way through exceptionally challenging times.”
Even though exports have declined in volume, they have increased in value by 7%, according to the Export report issued by Wine Australia. Exports to Singapore, Hong Kong, Thailand, South Korea, India, Japan and Taiwan were the key contributors to the growth in value.
Australia is the fifth largest wine exporting country in the world.
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