While the trade war between the US and China is creating uncertainty across the globe, Australia has taken the positive step of signing a Free Trade Agreement with China. The agreement lowers tariffs on many items and positions Australia favourably with this important trading partner in the future. It not only makes Australian products more competitive but also allows us to take advantage of future opportunities. President Xi has stated that he wants China to import US$30 trillion in foreign goods and US$20 trillion in services over the next 15 years, which is good news for many Australian industries, and the wine industry in particular.
Wine exports to China are booming
Australian wine exports to China have increased 51% year on year.
Australian wine exports to China have increased 51% year on year , with over $1.05 billion or 234 million bottles of sales this year. China is now Australia’s largest wine export market and is equal to the combined value of the next three markets, US, UK and Canada. It is anticipated that the volume and value of wine exported to China will continue to grow as zero tariffs make them even more attractive.
Some Australian wine sells at a premium of up to 30% in China, making it not only an attractive market but quite profitable as well. Although the majority of wine sold there is currently priced between $2.50 and $4.99 a litre, the fastest growing segment is for wine valued at more than $200 per bottle.
Trade challenges can be overcome
The good news doesn’t come without some challenges. Earlier this year there was speculation that large exporter, Treasury Wine Estates, was experiencing excess inventory in China. These concerns have since been put down to temporary issues relating to stricter border control. This does highlight that doing business in China isn’t always easy, but as exporters have found , getting through bureaucracy and cultural issues does get easier with experience. The reward to overcome these challenges is high, which is why many wine exporters are gearing up for a strong December in preparation for Chinese New Year and an even bigger 2019 as tariffs fall.
As you position your business to take advantage of this opportunity, partner with an agency who can help you on your journey.
