Australian wine exports to China had significantly risen in recent years to become an AUS$1 billion market. Trade was heavily exposed to the Chinese market, especially for premium reds.
This growth was seen as a threat to the development of the Chinese domestic wine industry and was thwarted through a protectionist anti-dumping move. The barriers, which will have a substantial effect on the Australian wine industry were driven by domestic factors as much as by bilateral relations.
China hit a range of Australian goods with punitive duties, in turn giving a boost to African suppliers. Ever since it slapped up to 212 percent tariffs on Australian wine, exports of South African wine to China have jumped 50 percent.
Despite the COVID-19 pandemic, wine exports had hit a record year-on-year value of $3.1 billion in the 12 months ended October 2020, before recording a steep decline in the final two months of the calendar year.
The decline in exports to China had been offset by significant growth in exports to Europe, up 22 percent to $704 million, the highest value in a decade. There was also growth in North America, up 4 percent to $628 million, and Oceania, up 11 percent to $115 million.
Wine businesses are resilient and are already adapting to these changed market conditions, increasing their engagement in markets other than China, particularly the UK, USA, Canada and the domestic market.
Although restrictions on Wine and other industries are quite disruptive, their impact on the overall Australian economy is less, much due to its $14 billion monthly trade in ores.
Whatever impact the Chinese sanctions are having is being offset by the realisation that they just have to buy our iron.
Veye Pty Ltd(ABN 58 623 120 865), holds (AFSL No. 523157 ). All information provided by Veye Pty Ltd through its website, reports, and newsletters is general financial product advice only and should not be considered a personal recommendation to buy or sell any asset or security. Before acting on the advice, you should consider whether it’s appropriate to you, in light of your objectives, financial situation, or needs. You should look at the Product Disclosure Statement or other offer document associated with the security or product before making a decision on acquiring the security or product. You can refer to our Terms & Conditions and Financial Services Guide for more information. Any recommendation contained herein may not be suitable for all investors as it does not take into account your personal financial needs or investment objectives. Although Veye takes the utmost care to ensure accuracy of the content and that the information is gathered and processed from reliable resources, we strongly recommend that you seek professional advice from your financial advisor or stockbroker before making any investment decision based on any of our recommendations. All the information we share represents our views on the date of publishing as stocks are subject to real time changes and therefore may change without notice. Please remember that investments can go up and down and past performance is not necessarily indicative of future returns. We request our readers not to interpret our reports as direct recommendations. To the extent permitted by law, Veye Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss, or data corruption) (as mentioned on the website www.veye.com.au), and confirms that the employees and/or associates of Veye Pty Ltd do not hold positions in any of the financial products covered on the website on the date of publishing this report. Veye Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services.