Releasing the figures in its export report this week, Wine Australia says the implementation of the China-Australia Free Trade Agreement (ChAFTA) at the end of 2015 has provided further impetus to an already strong market.
Now valued at around $607m AUD ($481m USD), mainland China is by far the largest market for Australian wine exports, followed by the US at $464m AUD ($378m USD).
But most impressive are the growth rates (exports to Mainland China up 44% and up 33% to Greater China); following on from the 50% growth to mainland China recorded last year.
Globally, Australian wine exports increased by 10% ($201m AUD / $159m USD) in value over the last year, reaching a total of $2.31bn AUD ($1.83bn USD). Export volumes worldwide increased 7%. The average value of exported wine was up 3%, showing a continued shift towards higher priced wines.
Shift in Chinese import landscape
Australia is the world’s fifth biggest exporter of wine, coming after France, Italy, Spain and Chile. But Wine Australia says the rate of export growth this year has outperformed these other countries.
Premium wines saw the strongest growth, while carbonated wines (including varieties such as Moscato) are pinpointed as another area of interest, with exports in this category doubling to $30m ($24m USD).
A decade ago, exports to China were valued at just $27m AUD ($21m USD), but that has increased dramatically with China overtaking the US as Australia’s top export market for wine by value last year, a position it maintains with continued growth.
Key trends in the evolving Chinese wine market
- Expanding market – such as some 48m urban upper-middle class drinkers of imported wine
- Population with growing disposable income
- More consumers purchasing wine for themselves, rather than a gift
- A younger and more diverse wine drinking population
- Continued growth in red wine sales, with consumers typically favoring fruit-styled, softer wine with lower tannin & acidity
- Developing demand for white wine, particularly Riesling, Sauvignon Blanc, Chardonnay, Moscato
- Shift to online purchasing
- Regional variations in wine preferences: people in the east prefer earthy, rich reds; those in the west favor elegant, soft styles. Meanwhile, in the north consumers look for bold, drier reds; and those in the south prefer smoother red styles.
Source: Wine Intelligence / Wine Australia
Greater China (mainland China, Hong Kong and Macau) ‘has been at the hub of the revival of Australian wine exports’, with Hong Kong a vital trading hub as it has important distribution links to mainland China and beyond.
Exports to Greater China increased 33% to $721m AUD overall in 2016-2017.
With ChAFTA reducing import tariffs for Australian wine into China, however, less wine destined for mainland China is being routed through Hong Kong, meaning a decline in exports to Hong Kong while exports to mainland China increase (the value of exports to Hong Kong declined by 8% while volume declined by 15% in 2016-2017).
“By value, Australia holds a 24% share of wine imported by mainland China, behind only France with a 41% share,” says Wine Australia. “However, Australian wine exports are growing at much faster rates than most major competitors.”
Australian wine exports to the Northeast Asia region also continue to grow: with value increasing by $178m (29%) to a record $797m AUD. Southeast Asia is the next biggest growing region with exports increasing by $20m (1%) to a record $162m.
The US
Meanwhile, wine exports to the US, Australia’s second largest wine export market, increased 3% to $464m AUD: the highest value since 2011-2012.
“The overall increase in value was driven by white wine exports, up 3% to $181m, and carbonated wine (mainly Moscato) increasing 10-fold to $11m in value,” says Wine Australia.
The US is the largest destination for Australian Pinot Grigio exports; growing 16% to $24m, while the premiumization trend continued with exports of $10 per liter FOB or more increasing by 21% to $43m.
Exports to Europe, however, declined by 1% to $568m. The UK – which is Australian wine’s top destination by volume – declined in value by 7% to $341m.