Wine exports to China shrank to A$8.1 million in June from a peak of A$1.2 billion in January 2020.
“That’s over two billion litres of wine, or over 2.8 million bottles,” said RaboResearch analyst Pia Piggott, adding that the inventory was depressing prices, particularly for commercial red wines. “No other market can quickly compensate for the China market,” said Lee McLean, chief executive of industry body Australian Grape & Wine, thanks to Chinese drinkers’ obsession with red wine.
The recent removal of tariffs on Australian barley has fed hopes for an early easing of the five-year tariffs China imposed on Australian wine in 2021. “Thus, two-plus years into the tariff, prices of Australian commercial red grapes have significantly declined, and oversupply issues remain.”