AUSSIE FORECASTER: COVID-19 TO CAUSE SHORT TERM IMPACT ON WINE EXPORTS TO CHINA
By Susan Lewis
Credit: Joey Csunyo/Unsplash
COVID-19 will reduce Australian wine exports to China in the short term, but growth will sustain over medium term particularly the premium wine category, said Australia’s national commodity forecaster.
According to a report prepared by the Australian Bureau of Agricultural Resource and Economics and Sciences (ABARES), sales of imported wine during lunar new year in China have fallen due to the extended shutdown of retail and hospitality businesses, which are the major outlets for the sales of imported premium wine.
It said sales of entry level wine (priced at less than AUD10 per litre) will also be affected as consumers tighten household budgets in response to growing economic uncertainty and food inflation.
These factors are expected to reduce Australian wine exports to China in 2019–20 financial year.
Despite considerable uncertainty, ABARES assumed that COVID-19 in China will be largely contained by 2020–21.
ABARES predicted that once the virus is under control, China’s demand for both premium and entry level wines will slowly recover as Chinese households feel more confident.
Over the medium term to 2024–25, ABARES said growth in China will be a key driver of Australian wine prices. It predicted that Australian premium wine will fare better in the Chinese market that entry level wines.
The report forecast that demand for imported premium wine from wealthier consumers will increase further thanks to producers’ marketing efforts.
However, it said Chinese households may withhold purchases of entry level wine in a protracted slowdown of the Chinese economy, now made more likely by the COVID-19 outbreak.
At the same time, increasing competition from Chile and France will also limit potential price rises of Australian wine in China over the medium term.
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