Industry experts are predicting red wine prices will fall in Australia following China’s decision to impose hefty tariffs on imports.

“Measures implemented to combat COVID-19 reduced demand for red wine imports in China are expected to continue to put downward pressure on red wine prices,” an Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) report said.

Chinese consumption of wine has fallen in 2020, resulting in falling imports. Imports from all exporters slowed in the first three quarters of 2020. According to the General Administration of Customs, in the third quarter of 2020 volume fell by 29% and value by 20% compared with the same quarter in 2019.

“The average value of Australian red wine exports is expected to fall because high-quality wine formerly expected to be exported to China will be sold into other markets at lower prices,” ABARES added. “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.”

The latest Australian agriculture outlook also predicts Australian wine grape prices will fall 28% to $500 a tonne.

“Faced with lower export prices, wineries will likely redirect red wine grapes in the forthcoming vintage into lower-value products and pay lower prices for red wine grapes,” ABARES said.

SA Wine Industry Association chief executive Brian Smedley told Adelaide Now: “You’ll see some price adjustments going through system, and probably the higher levels of profitability that some companies enjoyed will come down.” 

Chief executive of Tahbilk wines Alister Purbrick told The Age that “Australian consumers are going to have a very good time of it over the next couple years”.

Wine Victoria chair Angie Bradbury also predicted there would be “great opportunities” for wine lovers.

“There is a lot more Australian wine that is going to stay on our shores,” she said.

Wine exports to the United Kingdom and United States are expected to remain high for the rest of 2020–21. UK and US demand is strong for lower-value, bulk ‘commercial’ wines (under $10 per litre). Australian exports to both markets grew in the first three quarters of 2020 compared with the same period in 2019.

Home consumption of lower-value wine grew when measures to contain the spread of COVID-19 restricted travel and consumer options to dine away from home.

“For many people, lower-value bulk commercial wines remained affordable when employment and incomes were uncertain,” ABARES said. “There is also likely to be some diversion of higher value wines from the Chinese to UK and US markets, following the developments in the Chinese market.”

However, white wine prices are tipped to rise in the year ahead.

“Prices of white wines are likely to rise as stocks fall, partly due to the COVID-19–related distillation of wine stocks into industrial alcohol in Europe,” ABARES concluded.

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