Opportunities and trends for Australian wine producers
Since the removal of import duties on Australian bottled wine in late March 2024, Australian wine exports have surged to mainland China. This bulletin provides an update on the latest export results for Australian wine and a look at significant trends in the overall wine market in mainland China.
In the 12 months ended September 2024, the value of Australian wine exports to mainland China increased from $8 million to $612 million, while volume increased from 1 million litres to 59 million litres.
Although the September quarter was smaller than the June quarter in both volume and value, it was still significant – totalling 27 million litres worth $214 million (see Figure 1 for the monthly export values). Australian exports are now roughly half the peak recorded in 2020, just prior to the imposition of the import duties.
It’s important to note that shipments in the first six months likely represent re-stocking of Australian wine in the market after a long absence. Export levels are not necessarily equivalent to retail figures, and it will take time before it is evident how Chinese consumers are responding to having Australian wine back in the market.
Figure 1: Australian wine exports to mainland China by month
There were 927 businesses exporting Australian wine to mainland China during the year, the top ten exporters by value contributed 68 per cent of the total value and 38 per cent of total volume.
Exports to China by price segment
While the export figures to mainland China are very positive, the volume of exports to China is relatively small compared to value – the litres equate to around 80,000 tonnes of grapes out of a total harvest of 1.4 million tonnes in 2024 (six per cent). The bulk wine component of exports to mainland China was about 50,000 tonnes. As such, this volume is unlikely to substantially reduce the oversupply of red winegrapes in the warm inland regions where the oversupply has been most acute. In 2024, the combined red winegrape crush from the Riverland, Murray Darling – Swan Hill and Riverina was almost 400,000 tonnes in 2024.
There were differences in the impact on the volume and value of Australian exports by price segment. The volume increase was driven by growth in exports below $2.50 per litre – primarily unpackaged wine which is likely to be bottled as Chinese wine brands, rather than Australian brands. In contrast, value growth was driven by wines in the top price segments; exports with an average value of $10 per litre and above increased from $4 million to $516 million. This segment accounted for 85 per cent of the value of Australian exports to mainland China.
This reflects Australia’s position in the market in 2020, when Australia held a 34 per cent share of the premium wine market in China. These latest figures suggest Australian wineries are focussed on re-claiming that position.
Opportunities in the China market
A channel that presents as an opportunity for premium wine is the fine dining segment. According to statistics from Meituan, the number of fine dining restaurants in China increased by 17 per cent in 2023 to reach 6,835 establishments. Euromonitor International expects demand for premium wine to benefit from this trend as wine is becoming increasingly popular as a beverage of choice to accompany meals.
Traditional wine bars also continue to play a significant role as one of the key channels for wine consumption. These establishments typically offer a wide selection of wine brands, primarily focussed on imported products at higher price points.
E-commerce is also a key channel for wine retail, offering the broadest brand coverage and diverse price levels. Tmall and JD are the leading e-commerce platforms for wine. Specialist wine stores cater to a higher tier consumer base seeking high-quality products, while hypermarkets serve the mass market with a range of more affordable products.
Consumer trends and wine styles
The younger consumer (25 to 39 years) is also likely to drive growth in imported premium wines. They are known to favour quality over quantity and show the greatest interest in premium and imported wine. They are largely driving growth in spending across all categories (not just alcohol) and show great enthusiasm for increased spending.
By wine style, Australian wine exports to mainland China in the last 12 months were similar in profile to before the tariffs were imposed in late 2020. Over 90 per cent of the volume shipped to mainland China was still red wine, followed by still white wine with a 5 per cent share. The top varieties exported were Shiraz and Cabernet Sauvignon, followed by Merlot and Chardonnay.
While red wine is still dominant, wine drinkers in China have also become more open to exploring other wine styles such as white wines and sparkling wine. Anecdotally, there is also growing interest in no and low alcohol wines as the health and wellness and moderation trends are also evident in China as it is in many other markets around the world. This trend is especially prevalent among older consumers in China who are drinking less alcohol in general. According to Mintel, growth accelerated in the Chinese non-alcoholic drinks market in 2023 as life returned to normal after the pandemic. Mintel have forecast a CAGR of 5.6 per cent between 2023 and 2028 for this category.
The size of the wine market in mainland China has changed significantly over the past five years with declines in both imported and domestic wine consumption. According to Euromonitor International, production of domestic wine in mainland China has fallen from 304 million litres in 2020 to 133 million litres in 2023 and forecast to fall to 76 million litres by 2027. These trends have been influenced by the COVID-19 pandemic, associated lock-down periods, a slowing economy and low consumer confidence. While mainland China is the world’s second biggest economy, it is ranked 72nd in GDP per capita suggesting there is still great potential for growth.
The exit of Australia from the wine market hastened decline in wine consumption in mainland China. No other country has replaced all of the volume of wine that Australia was exporting to the market. Exports from the top four importing countries to mainland China have generally been on a downward trend for the last six years and the latest figures show this trend has continued. Data from the Global Trade Monitor shows that in the 12 months ended July 2024, the volume of bottled exports from each of Australia’s four major competitors to mainland China declined - France (down 21 per cent), Chile (down 13 per cent), Italy (down 15 per cent) and Spain (down 29 per cent).
The future of Australian wine in China
The export results for the September quarter have reaffirmed the opportunity for Australian wine in China. There is optimism that export sales will not only re-fill supply chains, but ultimately deliver sustainable volumes through renewed interest from trade and consumers, as experienced during the recent roadshow in China (20-28 August). Led by Wine Australia and supported by the Australian Trade and Investment Commission, the roadshow brought together 50 exhibitors who presented more than 90 Australian wine brands to receptive and engaged audiences at masterclasses and tastings held in four key cities: Beijing, Shanghai, Chengdu and Guangzhou. Australian wines were met with resounding enthusiasm at the roadshow and this positive momentum suggests the potential for continued success and growth in China as part of a continued strategy of market diversification across the Asia region.
A strong Australian wine presence at the China International Import Expo (5-10 November) and ProWine Shanghai (12-14 November) will be the next Wine Australia trade forays. ProWine Shanghai is China’s leading international trade fair for wine and spirits, jointly organised by Messe Düsseldorf Group and Food and Hospitality China (FHC). There were over 27,000 trade visitors to the 2023 event. In 2024, Wine Australia is hosting 25 booths and 32 exhibitors.