In the past five years, the number of drinkers of Australian wine in China has doubled. Many producers have benefited from the consumer’s overall good perception of their vintages. Wines from Australia are celebrated as high quality and authentic, with many Chinese recognizing the country’s long tradition of winemaking.
China is predominantly a red wine market. Australian red wine exports have reached around US$886 million in 2017, with Shiraz and Cabernet Sauvignon leading the sales. White wine, however, is steadily making its presence known in the market, with exports increasing by 40%. Chardonnay and Riesling are popular choices, especially by the younger Chinese consumers.
Local Presence in China’s Wine Market
Huge demand for wine means competition is stiff in China. Many producers have difficulty maneuvering in the region’s first-tier cities like Beijing, Shanghai, Guangzhou and Shenzhen where there are many rivals in the market. The smaller cities offer more untapped opportunities, but finding the perfect market niche for businesses can be a challenge.
Meanwhile, online sales of Australian wine are generally high, but with over 150 brands available for purchase, it is the more popular vintages that benefit from the hype. This is why having local support in China is important. Successful wineries have learned to cooperate with the right local partners to handle the business at a local level.
Tariffs, Regulations and Customs
The existing tariffs on Australian wine entering the Chinese market have been eliminated by January of this year due to the China Australia Free Trade Agreement (ChAFTA). Value-added tax (17%) and excise tax (10%), however, still apply to the sale of wine in the region. Due to the zero tariff, many are expecting Australia to become one of China’s biggest sources for imported wines.
Australian exporters must also keep in mind the regulations set for consumable products by the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) and the standards dictated by the Guobiao (GB). Wines should also be tested for copper and iron prior to export. Those that exceed the limit imposed by Chinese authorities (1 mg/L for copper and 8 mg/L for iron) are rejected upon arrival.
With such a solid support base of enthusiastic drinkers, Australian wine’s popularity in China is expected to continue for many years to come. Though the competitive market poses as a challenge to many, it certainly offers a lot of opportunities. For wine producers, considering local standards give them the edge they need to stand out among competitors, while following regulations help them avoid major issues in the future.