Australian Wine Exporters Break New Ground in Asia Despite Drop in China Trade

Australian Wine Exporters Break New Ground in Asia Despite Drop in China Trade
Bottles of Australian wine are seen at a store selling imported wine in Beijing, China, on Nov. 27, 2020. Florence Lo/Reuters
Daniel Y. Teng
Updated:
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Despite experiencing a turbulent year in the global wine market, Australian exporters are making significant gains across Asia after being denied the China market by Beijing.

In its latest figures, Wine Australia revealed that overall volumes were down 17 percent to 619 million litres resulting in a 30 percent decline in the value of exports to AU$2.03 billion (US$1.45 billion).

The Export Report revealed that exports to North American and European markets either stabilised or fell slightly—a preceding report in April 2021 saw significant gains in the United Kingdom and Germany.

The industry group said the “unprecedently tough market conditions” over the past 12 months ending December 2021, was caused by issues such as supply chain bottlenecks and a “counter-swing” in some markets after customers stockpiled wine during the 2020 COVID-19 outbreak.

However, Wine Australia blamed the Chinese Communist Party’s (CCP) ongoing tariff war against Australia for causing the biggest dent in the fortunes of exporters.

Exports to mainland China from October 2020 began a dramatic decline after Beijing slapped tariffs, ranging between 116 to 218 percent, on Australian wine product.
Export value (million AUD, FOB) – mainland China versus the rest of world. (Supplied/Wine Australia)
Export value (million AUD, FOB) – mainland China versus the rest of world. Supplied/Wine Australia

Current figures reveal that the volume of exports to China declined 93 percent to 6.4 million litres, equating to a 97 percent drop in the value of exports to AU$29 million—a loss of nearly $1 billion in value and 90 million litres.

At the same time, significant increases in export value were recorded in countries around mainland China including Singapore (up 108 percent to AU$166 million), Hong Kong (up 45 percent to $191 million), South Korea (up 74 percent to $47 million), Taiwan (up 65 percent to $31 million), and Thailand (up 31 percent to $28 million).

“This is the first time that exports excluding mainland China have reached $2 billion for a calendar year since 2009,” Rachel Triggs, Wine Australia’s general manager of Corporate Affairs and Regulation, said in a press release on Feb. 3.

“The pandemic is still disrupting the on-trade, the global freight crisis is continuing to cause shipping delays and increased freight costs, and while there was export growth to many destinations, it will take time to offset the loss in trade to mainland China,” she said.

(Supplied/Wine Australia)
Supplied/Wine Australia

“This is not something that will happen overnight, nor within a year. But the Australian wine sector is resilient, and there are early signs that hard work in expanding and diversifying markets is paying off.”

Since April 2020, Australia has weathered an ongoing trade coercion campaign from the CCP after Foreign Minister Marise Payne called for an investigation into the origins of COVID-19. The move drew a sharp rebuke from Chinese Ambassador to Canberra Cheng Jingye, who warned of potential action against Australia’s trading relationship with China.

In the following months, the CCP implemented a series of bans, suspensions, and regulatory hurdles on coal, wine, beef, barley, lobster, timber, lamb, and cotton exports to the country.

Treasurer Josh Frydenberg revealed in September however that despite Australian exports dropping $5.4 billion over the year to the June 2021 quarter.

Exports to the “rest of the world have increased by $4.4 billion,” he told the Australian National University’s Crawford Leadership Forum.
Meanwhile, reports have emerged that despite Beijing’s intentions to cripple Australian trade, Chinese businesses and individuals are circumventing the CCP’s economic coercion measures by importing goods through alternative markets and then bringing them into China—the “grey trade.”

In May 2021, Chinese police found over 569 kg of lobster during a raid, with an estimated street value of US$19,300. The shellfish were found along with typical goods preferred by smugglers including handbags, jewellery, shark fin, and smartphones.

In another instance, Chinese police seized 100 boxes—weighing 1,274kg—containing Australia’s famous Western Rock Lobster. The street value of the crustacean was estimated to be US$46,500, according to the South China Morning Post.
Daniel Y. Teng
Daniel Y. Teng
Writer
Daniel Y. Teng is based in Brisbane, Australia. He focuses on national affairs including federal politics, COVID-19 response, and Australia-China relations. Got a tip? Contact him at [email protected].
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