The oversupply in Australian wine has grown to 2 billion litres, or 2.8 million bottles, and even the removing of tariffs by China would nonetheless depart the business struggling, the Rabobank research mentioned.
The Asian powerhouse economic system was essentially the most precious marketplace for Australian wine exports in 2020, however then one 12 months later China imposed anti-dumping tariffs as political and commerce relations between Canberra and Beijing hit a brand new low.
In a double blow, Australian wine exports to the UK slumped throughout the identical interval because the nation got here out of its pandemic lockdown and other people consumed much less alcohol from residence.
From a whopping $898 million in worth for 2020, bottled wine exports to China have been decreased to solely $8.1 million within the 12 months to June 2023.
And Australian wine exports to all markets have collapsed by 33 per cent since China’s commerce hit on the business.
China’s resolution to take away tariffs on Australian barley earlier this month raised hopes the imposts on Australian wine exports can also be scrapped.
But even when that occurs, Australian growers face a diminishing urge for food for wine in China, the report discovered.
“Chinese consumers began transitioning away from wine as part of a broader decline in alcohol consumption on a per capita basis, however, declines were greater for wine than beer and spirits,” RaboResearch affiliate analyst Pia Piggott mentioned.
“COVID lockdowns and the economic slowdown curbing discretionary spending have also played a role in declining consumption to levels not seen since the 1990s.
“Despite solely Australia being hit by tariffs, the previous 5 years has seen quantity declines in imports from 9 of the highest 10 supplying international locations, as shoppers turn out to be extra value delicate.”
And wine exporters are facing tougher conditions in the UK – one of its most valuable markets.
New alcohol duty rates imposed by the British government will outweigh any discounts gained by the Australia-UK Free Trade Deal.
The wine glut means the Australian industry will continue to struggle and Rabobank expects more vineyards to be put up for sale.
“To return to stability and profitability, acreage must be decreased,” the report mentioned.
Source: www.9news.com.au
