China’s Ministry of Commerce (MOFCOM) announced yesterday 28 March that the crippling wine tariffs in place on Australian wine imports in China will be reduced to nil, effective from today.
Dr Martin Cole, CEO of Wine Australia, welcomed the news in a statement to media.
“Mainland China remains an important market for the Australian wine sector,” said Cole.
“Over many years, Australian wine companies have developed close relationships with importers, buyers and consumers of Australian wine in China and these relationships remain important to our wine community.
“Pleasingly, we know that trade and consumer sentiment for Australian wine in China remains positive.”
Treasury Wine Estates (TWE), Australia’s largest wine producer, has been actively anticipating the end of tariffs, and was recently provided access to preview a MOFCOM interim draft proposal on March 12.
“It’s fantastic news for the Australian wine industry and opens the door for renewed opportunities for local winemakers and growers, particularly in regional Australia,” said CEO Tim Ford.
“Treasury Wine Estates has remained committed to China as demonstrated by our continued investment in the market through our local presence with more than 120 team members and partnerships contributing to Penfolds continued strong brand awareness in China.
Prior to the implementation of the tariffs, China’s wine market was worth approximately $1.2 billion, with 121 million litres of Australian wine being imported by 2198 exporters in the 12 months ending on October 2020. This made Australian wine the number one exported wine category in China with roughly a third of the market share.
Since then, the number of exporters has decreased to 117, with 1.4 million litres of Australian wine valued at $10.1 million imported into China in the 12 months up to December 2023. According to Trade Monitor data, no other country’s wine imports have replaced the volume of wine previously supplied by the Australian industry.
However, it appears unlikely that the removal of tariffs will signify a return to 2020 import levels, with Trade Monitor Data showing that total volume and value of wine imports is continuing to decline alongside a slowing economy and reduced consumer confidences.
This decline is evident in all four of China’s current top wine import countries, with French wine imports falling by 29%, Chilean wine imports by 18%, Italian wine imports by 31% and Spanish wine imports by 48%. In total, the total volume of wine imported into China has contracted from 688 million litres in 2018 to 248 million litres in 2023.
“The wine market in mainland China is different now to what it was at the end of 2020,” said Cole.
“Wineries seeking information to re-enter the market are encouraged to review the Export Market Guide, market insights and sign up for information about upcoming activities at wineaustralia.com.
“We will support the Australian wine sector to re-enter the market through a coordinated set of activities and advice on market requirements, while continuing our market diversification efforts in other markets.”
In TWE’s F24 interim results published in February, the wine producer outlined its plan for reestablishing its presence on the Chinese market. As per its latest ASX announcement published yesterday, this plan includes:
- “Re-establishing distribution for Penfolds entry-level Australian COO portfolio, including Penfold’s Max’s, Koonunga Hill and One by Penfolds;
- Re-allocating a portion of Penfolds Bin and Icon tiers from other global markets in order to progressively re-build distribution to China, while maintaining the strong momentum in those other markets where Penfolds has successfully grown in recent years;
- Re-establishing distribution for the Treasury Premium Brands Australian sourced priority portfolio in China, including Rawson’s Retreat; and
- Expanding sales and marketing resources, and brand investment, in China.”
“We’re excited to bring more of our Australian luxury and premium wines back to the China market but we’re mindful it will take time to sustainably regrow both supply and demand,” said Ford.
“The recent Penfolds China wine releases have received great consumer feedback and praise from wine critics, and we’re continuing to explore increased winemaking opportunities in China as well as broadening our global luxury wine portfolio.
“We’re thankful to the governments in Australia and China for working tirelessly to stabilise relations between both countries, with this work ongoing as we continue to foster our local winemaking ties in China.”
