NEWS
OZ REPORT: WINE EXPORT IS BIGGEST LOSER IN TRADE TENSION, GRAPE PRICE TO FALL 28%
By Susan Lewis
8-12-2020
Source: Department of Agriculture, Government of Australia
Wine is predicted to be the biggest loser among all commodities in the on-going trade tension between Australia and China, both export value and volume are expected to fall while price for wine grapes will drop 28% in 2020-21, according to the Abares commodities report released yesterday by Australia's Department of Agriculture.
The report said Australia may be able to divert a limited amount of wines to markets in the UK and the USA, but the demands in these countries will not be enough to make up the loss in export value from the Chinese market.
It is noted that consumers in the USA and UK have strong demand for lower-value bulk wines typically under USD10 per litre. But demands in China concentrate on the premium end of more than USD10 per litre.
It predicts that the average value of Australian red wine exports will fall because high-quality wine formerly expected to be exported to China will be sold into other markets at lower prices.
The volume of wine exports is also expected to fall slightly as it is unlikely that all the wine previously expected to be exported to China will be redirected to other markets in the short term.
Faced with lower export prices, the report said wineries will likely redirect red wine grapes in the forthcoming vintage into lower-value products and pay lower prices for red wine grapes.
The report predicted a 28% drop in the price of wine grapes.
Source: Department of Agriculture, Government of Australia
The report also noted that there was a spike of wine export to China in the third quarter of this year, after two consecutive quarters of contraction.
Wine export volume rose by 7% and value by 29% year-on-year in the third quarter, export data indicates this growth took place in the premium end of the market.
Premium wine comprised around 64% of the value of Australian wine exports to China in the September quarter.
The report said the increase in Australian wine exports to China in the September quarter appear to be the result of Chinese importers building stocks ahead of an anticipated imposition of the recently announced anti-dumping duties.
(the writer can be contacted at: info@thewinechronicle.com)
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