Australian wine exports to China are up 51% to AU$1.04 billion (US$807 million), an Australian record for exports to a single country, while exports to the U.S. have plunged 7% to AU$439 million (US$341 million). This is according to a report released Monday by Wine Australia, the government agency that promotes and regulates the country’s wine industry.
The Chinese market has usurped the U.S. to become Australia’s second-largest wine export market by volume, with strong growth recorded at all price points, Wine Australia noted.
“The gap between No. 1 market, China, and No. 2 market, America, is going to be so wide in three, four or five years…” said Alister Purbrick, chief executive of Tahbilk Wines.
Australia is also expected to pick up ground in China at the expense of its competitor, California, after China imposed an extra 15% tariff on U.S. wine imports, in retaliation of President Trump’s restrictions on Chinese steel shipments.
But there many factors that have caused this major shift.
“I think the fact that a lot more Chinese own Australian wineries has changed the complexion of things,” said Bruce Tyrrell of Tyrrell Wines, who believes close business ties are being built between the two countries as a result.
Andreas Clark, Wine Australia Chief Executive, predicts the historically low yields of the 2017 vintage in the Northern Hemisphere will continue to drive demand for Australian wines. This is especially true of bulk wine, which grew by 19% to AU$486 million (US$377.5 million).
Most expect another solid year of sales as the China-Australia Free Trade Agreement comes into effect. Tariffs between the two countries were reduced by half in January and will be completely removed in January 2019.
Meanwhile, Australian wine exports to the U.S. may be slowing overall, but the latest figures show growth in two price categories: US$8–$11.99 and US$20–$24.99.