Highlights
- Australia has been overtaken by Chile as the second largest exporter of wine to China.
- There’s still plenty of Australian wine stock on shelves that pre-dates that tariffs.
- Chinese owners of Australian wine estates say they are having problems selling tens of millions of dollars’ worth of stock sitting in warehouses in mainland China due to diplomatic tensions.
Barely a drop of Australian wine is getting into China.
Export volumes plunged 99 per cent in the third quarter alone this year.
This was the result of China's import duties ranging from 116 to 218 per cent on Australian wine brands following Canberra’s inquiry into COVID-19’s origins - which did not bode well with Beijing - and its subsequent "anti-dumping investigation" into whether Australian wines were being sold too cheaply in China.
But wine lovers in mainland China could be forgiven for being oblivious to the staggering contraction in Australian wine exports.
That’s because there’s still plenty of old stock left pre-dating the tariffs.
In retail shops in central Beijing, bottles of Penfolds and Wolf Blass line shelves - mostly at similar prices as before the levies hit.
Chinese consumers favour European wines. Source: AAP
SBS Chinese explores the impact of the tariffs on Australian wine sales in China amid Canberra’s ongoing trade war with Beijing.
Trying to time the market
Fulham Valley Winery’s Jennifer Wang says the duty imports have had a detrimental effect on her Australian wine sales in China.
Ms Wang thought the best response at the time of the tariff's implementation was to ship about three years’ worth of stock to mainland China.
“Now, most of our Australian bottle wines, worth tens of millions of dollars, are sitting in a warehouse, not being sold,” she says.
Ms Wang partly blames the news of the tariffs giving consumers the wrong impression.
Chile enjoys zero tariffs on wines under their free trade agreement with China. Source: AAP
Consumers think Australian wines no longer exist, which has caused unprecedented headaches for our distribution and marketing.
“In addition, due to the [deteriorating] relationship between China and Australia, nationalistic sentiment has led many Chinese consumers to declare on the internet that they do not buy Australian wine,” she says.
Other wine export sources seize on Australia’s downfall
Customs data shows that in terms of volume, French bottle wine imports grew by 25 per cent, and Chilean wine surged by 36 per cent, overtaking Australia as China’s second largest exporter of wine.
Spain further clinched 62 per cent in volume and Italy boomed 52 per cent in the third quarter of the year.
Australia now sits in fifth place behind France, Chile, Italy and Spain. 
Beijing-based wine blogger Jim Boyce says even before the tariffs on Australia, the wine industry in China had been struggling with overall imports and local production stagnation or falling over the past few years.
Australia is now the fifth biggest wine exporter to China. Source: Supplied
“This is despite increasingly adventurous and wealthy consumers, a growing wine education sector and rapidly improving local wines.”
Mr Boyce says while Chinese consumers are trying wine beyond Australia, the overall value and volume of bottle wine imports has fallen.
“Wine industry people are looking at how market share will be redistributed - who gets Australia’s share – when the focus should be on making that share bigger.”
Chinese love for red wine
Late last month marked one year since mainland China’s preliminary tariffs on Australian wine came into effect.
Ninety-six per cent of the decline in exports was red wine.
Despite the import duties, Chinese middle-class consumer Cassie Shen says there's still Australian wine stock at her local retailer.
There is a risk that some consumers will move on from Australian wine says Beijing-based wine blogger Jim Boyce. Source: AAP
“At the convenient store Family Mart, there’s still plenty of Australian wine,” she says.
Mr Boyce says more people are drinking Chilean and other wines.
“But I wouldn’t say they’re flocking to it,” he says.
Ms Shen says at the lower-priced end, she prefers Chilean wine.
“Australian wine tastes good. Yellow Tail is reasonably priced. But if I compare [Chile’s] Casillero del Diablo to Yellow Tail, I probably prefer Casillero del Diablo,” she says.
Another Chinese consumer Izzy Yan tells SBS Chinese she favours wines from Europe.
“I feel like ordinary consumers have a higher regard for French and Italian wines."
Wines from Australia and the US are ‘new world’ that we don’t know much about.
Dr Eva Huang from the University of Sydney’s Business School says Chile has some advantages over Australia.
“They’ve been around longer in China… they’ve also had a free trade agreement with China since 2005 so they pay zero import duties [on wines],” she says.
Falling to fifth place
China was once Australia’s most profitable wine export market.
According to Wine Australia’s figures, the nation's wine exports to mainland China had fallen from 121 million litres valued at $1.26 billion to 10 million litres worth $82 million year on year to October.
Data shows the number of Australian wine companies exporting to mainland China has dropped from 2,189 to 399.
However, Australian wine exports to the rest of the world (excluding mainland China) increased by 10 per cent in value to $1.99 billion.
The sector’s peak body Australia Grape & Wine says it comes as no surprise that Chile has overtaken Australia as the second largest wine exporter to China.
Wine industry insiders say it comes as no surprise that Chile has overtaken Australia as the bigger wine exporter to China. Source: AAP
“We still have a strong customer base in China that we are unable to satisfy due to the trade restrictions,” says the body’s chief executive Tony Battaglene.
Australia keen to resolve matter with China
The Australian government remains keen to fight China’s tariffs on Australian wine.
In late October, at Australia’s request, a World Trade Organization (WTO) dispute settlement panel was established to examine the harm the tariffs have caused the nation’s wine industry.
The next phase in the process is the selection of panelists to adjudicate the dispute.
“Australia is a strong supporter of the rules-based trading systems, where exporters and importers make commercial decisions based on market signals,” says a DFAT spokesperson.
The Sydney Morning Herald last week reported the Australian government has not been able to contact Chinese ministers for , in part due to human rights issues and national security decisions.
Mr Battaglene says Australia’s wine industry has been working closely with the federal government, including Trade Minister Dan Tehan and Agriculture Minister David Littleproud, to diversify their export markets.
“[They’ve] had strong growth in sales to Singapore and the Republic of Korea,” says the spokesperson.
Australia's Trade Minister Dan Tehan. Source: AAP
“[We] have nothing but praise for the assistance they are providing in assisting market diversification,” says Mr Battaglene.
Winning back market share
Mr Battaglene concedes it will be very hard to win back market share if China chooses to lower its tariffs.
“However, the strong support we have received from Chinese consumers, distributors and retailers gives us confidence that when the time comes, the market will again prove successful and profitable for Australia,” he says.
Mr Boyce agrees.
Australia would regain at least some its market share for the very same reasons it succeeded in the first place.
He says many Chinese consumers may have a preference for Australian wine having worked, studied or travelled in Australia.
“Australia makes the kind of ‘bottled sunshine’ many consumers enjoy, often offers good value for money, has a well-recognised label in Penfolds and has a good reputation for food safety.”
