Australia United Kingdom picks up Australian wine exports but not enough to offset loss of sales to China

12:05  22 july  2021
12:05  22 july  2021 Source:   abc.net.au

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Wine Australia , a government organisation set up to promote and regulate the wine industry, said demand increased at the start of the coronavirus pandemic and was boosted in the months leading up to Brexit. The sharp rise in sales to Europe helped offset a big slump in exports to China in the last two months of 2020. Wine exports to China fell just 1% in value last year, given that the high tariffs imposed by Beijing were only imposed in November. media captionThe Australian wine lessons bound for China .

China remains Australia ’s largest wine market by value. Australian wine companies may have hit a big roadblock in getting bottles to China because of sky-high tariffs. But the road to Hong Kong appears to be wide open. Shipments to the city rocketed 111% in the 12 months ended June 30, to A7 million (6.7 million), according to the latest data from Wine Australia .

a stack of books: Australian wine sold well in the UK during COVID lockdown (ABC News) © Provided by ABC NEWS Australian wine sold well in the UK during COVID lockdown (ABC News)

Australia's wine exports to the United Kingdom have reached their highest level in a decade, but China remains the most lucrative market for Australian winemakers for now.

Australian wine sales to several countries grew in the past financial year.

Hong Kong, in particular, jumped 111 per cent to be Australia's fourth-largest market in value, worth $187 million.

Wine Australia's general manager for corporate affairs and regulation, Rachel Triggs, said the growth in exports to the UK — up 23 per cent in value and 16 per cent in volume — was particularly strong in the first half of the year.

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Australian wine exports also rose by value rose in Singapore, South Korea, Malaysia, Taiwan and Hong Kong. “But they did not offset the decline in exports to mainland China ,” said Rachel Triggs, general manager of corporate Read more: Australia to take wine dispute with China to WTO. The size of the potential loss is limited to the size of the deposit. Past profits do not guarantee future profits.

Wine exports to China totalled .26 billion in 2019. The Federal Trade Minister says the reports are concerning and the Government is trying to get more information. At least four wine importers have been advised by their local distributors to stop importing Australian wine , with Chinese But Chinese authorities are rejecting claims of new directives, with representatives of major ports at Ningbo and Guangzhou telling the ABC they have not received any new notice of changes. Officials at China 's Commerce Ministry have reportedly denied the existence of any new directives targeting Australia .

"There was a surge in wine sales in the [off-premises sales] because of the COVID-19-related shutdowns of [restaurants and bars] as well as some exporters sending wine to market ahead of Brexit because they were concerned about the red tape they might endure after Brexit," Ms Triggs said.

"We're not going to be able to find one single market that will make up for China, particularly at the prices we were seeing in China prior to the tariffs being applied.

"We are, however, seeing increases across a number of markets.

"For example, we're already seeing a positive trend and double-digit growth in the UK, Hong Kong, Singapore, South Korea, Malaysia, Thailand and Taiwan."

Those increases, however, have not been enough to offset the 33 per cent drop in value to China.

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China did not ban the wines , they imposed tariffs on Australian wines and accused Australian producers of dumping their product at an unfair price to local producers. The Australian government doesn’t believe the allegation but appears unwilling or unable to produce any evidence that backs up their In practice this means that Australian wine in China will be much more expensive compared to European, Chilean and American wine . Australian wineries are definitely facing a challenge: about 40% of their exports normally go to China . Diversifying is not easy when such a huge chunk of

China announced an investigation into some Australian wine imports in August, following a complaint from the China Wine Industry Association. Chinese regulators at the time said that they would investigate 40 allegations of unfair government subsidies in the Australian wine sector. China is by far the biggest importer of Australian wine , according to Wine Australia , a trade organization backed by the country's government. In the most recent financial year, which ended this September, mainland China alone made up 39% of Australia 's total wine exports by value, the group said.

The latest Wine Australia export report has shown the effect China's tariffs — of 107 per cent to more than 200 per cent — have had on Australia's wine industry.

In the six months to June this year, Australia exported just $13 million worth of wine to China, compared to $490 million over the same period last year.

As a result, wine exports in 2020–21 declined by 10 per cent in value, to $2.56 billion overall, and export volume was down 5 per cent, to 695 million litres.

However, excluding mainland China, exports increased by 12 per cent in value to $1.96 billion and increased by 6 per cent in volume to 643 million litres.

Exports to the United States also declined 7 per cent in value, to $400 million, and by 8 per cent in volume, to 127 million litres — or 14 million 9-litre case equivalents.

Ms Triggs said that — given the amount of wine Australia had to sell was at an all-time low last year after three consecutive lower vintages in 2018, 2019, and 2020 — it was positive to see so many markets buying more Australian wine.

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Australia 's winemakers are scrambling to find new buyers around the world after China imposed hefty tariffs on the industry, effectively cutting it off from its most important export market.

Australia 's wine exporters were already facing a drop in Chinese interest because of the pandemic, and many feared further declines during the diplomatic stoush. The writing was on the wall by August, when China 's Government launched two separate investigations into Australian wine — first looking at dumping and then subsidy allegations. Australian companies Emerald Grain and CBH were also suspended from exporting grain to China , with local officials claiming to have found weed seeds in a consignment.

"China was a fabulous market for a lot of exporters and a lot of exporters did really well there and they were getting really good money for their product," Ms Triggs said.

"But it doesn't necessarily mean there weren't other markets that were looking for Australian wine and that's what we're seeing across the globe in those increased figures in a lot of other markets."

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This is interesting!