From a gloomy exit to a return in sight, what has Australian wine experienced from 2019 to 2023?
(This article is reprinted from Wine Magazine)
Recently, the Ministry of Commerce issued an announcement on the review and investigation of the "double anti" measures for Australian wine, which has attracted widespread attention.
It is reported that the Ministry of Commerce received an application for review from the Australian Grape and Wine Association on October 31, requesting the Ministry of Commerce to investigate the necessity of continuing to impose anti-dumping duties and countervailing duties. After review, the Ministry of Commerce believes that the applicant's claims and the prima facie evidence submitted meet the requirements for reexamination and filing, and decides to conduct a review from November 30.
Looking back on the years of Australian wine in the Chinese market, it can be summed up in four words: "ups and downs". First, "riding the wind and gradually becoming the top stream", then "falling into the clouds and leaving the scene", and now "the willows and flowers are bright and dawn reappearing"...... What are the experiences behind the twists and turns?
Strong surge
In 2019, the market share was as high as 35.54%
After China's accession to the WTO, it actively integrated into the world economy. Tariffs on wine were reduced from 34.4 per cent in 2002 to 14 per cent in 2004. Since then, more and more imported wines of different varieties and flavors have appeared in the Chinese market, and domestic wine lovers can easily taste specialty wines from all over the world.
Australian wine has also launched an offensive against the Chinese market with a strong attitude, and exports have increased year by year. According to the Australian Wine and Brandy Authority (AWBC), by 2009, the Chinese market was the fastest growing market for Australian wine exports with a growth rate of 77%, a figure that far exceeded the 9% growth rate of the Australian wine export market that year.
2015 was a year of opportunity for Australian wines, with the signing of the Free Trade Agreement between Australia and China, followed by the announcement of a phased tariff reduction for wine and other products over the next five years.
Tariffs on sparkling wines, imported wines in containers smaller than 2 liters, and bulk wines have been reduced from 14% and 20% respectively, and both achieved zero tariffs in 2019. Preferential tariffs are like an invisible hand, helping Australian wines to further open the door to the Chinese market. Brands such as Penfolds, Swan Village, Fenfu, and Yellowtail Kangaroo have rushed to the beach to compete for the big cake in the market.
According to the China Chamber of Commerce for Import and Export of Foodstuffs, Native Produce and Animal Husbandry, the market share of Australian wine has been increasing: from 23.4% in 2015, to 24.7% in 2016, 26.7% in 2017, to 27.1% in 2018, and even as high as 35.54% in 2019.
2019 was one of Australia's most glorious vintages. This year, Australia changed the pattern of China's imported wine market, and its import volume reached 864.962 million US dollars, greatly exceeding France's 693.326 million US dollars, breaking France's hegemony and rising from the second to the first. Also in this year, Australian wine exports to China reached 1.3 billion Australian dollars, more than the United States, the United Kingdom, Canada, Singapore and other countries combined.
Australian Wine Export Report 2019
图片来源：Wine Australia官网
With the advantages of large production, good quality and moderate price, Australian wine has been able to sell well in China and is deeply loved by consumers, even in the face of strong competitors such as France and Chile, it has always occupied a considerable market share.
Gloomy exit
Exports plummeted by more than 90% in 2021
Recently. On July 6, 2020, the Ministry of Commerce received an application for a countervailing investigation by the China Alcoholic Beverages Association on imported wines originating in Australia, and subsequently opened an investigation on August 18.
On March 26, 2021, the Ministry of Commerce issued an announcement to impose anti-dumping duties of 116.2% to 218.4% on imported wine of 2 liters or less in containers of 2 liters or less originating in Australia, which will be implemented from March 28, 2021 for a period of 5 years.
Since then, Australian wine has staged a big ebb in the Chinese market, and the wine industry has been hit hard and fallen into a trough.
As can be seen from the 2021 Australian wine export report, in the 12 months to December 2021, Australia's wine exports totalled $2.03 billion, down 30%, and exports totalled 619 million litres, down 17%, a new low. Exports to Chinese mainland are even more miserable – exports plummeted by 97% compared to 2020, and exports fell sharply by 93%. In the list of the top 13 sources of imported wine in mainland China in 2021, Australia has long been nowhere to be seen.
Australian Wine Export Report 2021
图片来源：Wine Australia官网
With the loss of the Chinese market, Australian wine fell into a crisis of unsalable, with the stock of wine rising to 2 billion litres, equivalent to 2.8 billion bottles, and the surplus of wine could fill nearly 860 Olympic swimming pools. In order to absorb the high inventory, Australia is struggling to find a way out.
On the one hand, it aims at the British and American markets and increases exports, and on the other hand, it seeks new growth points in the Asian market, but the results are very small. The latest export report data released by Wine Australia shows that in the year to September 2023, Australian wine exports fell by 11% and exports fell by 4%. This performance is well below the long-term average. Exports to the United States and the United Kingdom fell simultaneously, with double-digit declines.
Australian wine exports from October 2022 to September 2023
图片来源：Wine Australia官网
Exports to Asia are mixed: exports to Singapore have declined significantly, exports to Hong Kong have increased, and market performance has been unstable. Although emerging markets such as Thailand and the Philippines are expanding, in the face of such a huge inventory, I am afraid it is only a drop in the bucket.
The return is imminent
A consensus on a solution will be reached in 2023
Since the beginning of this year, China and Australia have conducted in-depth discussions on properly resolving trade disputes between the two countries in the WTO. During this period, good news continued to be released. For example, China announced the end of the "double anti-dumping" measures on barley imports originating in Australia from August 5, and then Australia shipped the first batch of barley to China about 55,000 tons. This has rekindled the hopes of many wine merchants in the Chinese market.
On September 21, the Ministry of Commerce said that China is willing to work with Australia in the same direction, and on the basis of the dispute settlement of the barley case, promote a "package" settlement of the wine case and the case of anti-dumping and countervailing measures against three products against Australia by China and Australia. However, the Australian side does not seem to buy it, not only rejecting the "package" solution proposed by the Chinese side, but also continuing to file a lawsuit against China in the WTO for wine import tariffs.
For a while, the situation became confusing again.
On October 22, China and Australia finally ushered in significant progress - under the framework of the WTO, China and Australia held friendly consultations on WTO disputes such as wine, and reached a consensus on a proper settlement. The recent decision of the Ministry of Commerce to review the "double anti-dumping" measures for Australian wine means that there has been a substantial new breakthrough in the progress of its return to the Chinese market. Many Australian wine merchants are optimistic and are in full swing to speed up their layout, so as to regain market share as soon as possible.
Although the process has been full of twists and turns, for now, it has finally turned around. After three years of cold winters, Australian wines are likely to have a warm spring again.
Lee McLean, chief executive of the Australian Grape & Wine Association, said there was hope for a market recovery if tariffs were lifted. "It takes some time for businesses to reach out to their customers and make sure they build relationships with them, and the Chinese market has changed a bit in recent years," he said. We know that we may not be able to go back to the 1.2 billion market, but it is still a very important market for us and we need to work hard to reinvest it. ”
As Lee McLean said, during the period when Australian wine was gone, the market was no longer the same market, and in the context of the overall decline in wine consumption, even if it could meet the east wind, more efforts would still be needed to meet the new challenges.
(This article is reprinted from Wine Magazine)