Tariffs on Australian agricultural products have been reduced or fully abolished under the China-Australia Free Trade Agreement (ChAFTA) since January 1. Hence, large impacts on Australian wine exports to China are expected within the months to come.
China’s Wine Market
The People’s Republic of China is one of the world’s largest markets for imported wine.
With a population of 1.38 billion, a middle class that is willing to pay top-dollar for luxury products as well as western-oriented consumers, the market offers almost unlimited opportunities for wine brands and businesses around the globe.
Australian Wine in China
With the largest volume of imported wine coming from France, accounting for a 15 per cent share of the total wine market in China respectively. In contrast, exports from Australia have been steadily growing 24 per cent year on year, reaching a figure of 9 per cent of the total wine market in 2018 according to the Australian Ministry of Agriculture and Water Resources.
One factor of the growing success of Australian wine in China can be found in the increasing bilateral business between China and Australia.
The implementation of the China-Australia Free Trade Agreement (ChAFTA) in 2015 has steadily decreased tariffs and facilitated trade between the two nations, resulting in a growth of local awareness of premium wines from Down-under.
Additionally, the Australian wine industry is benefiting strongly from a growing middle class in China with a developing interest in wine. The demand for premium wine is evident with strong growth in higher price segments.
Elimination of Tariffs
By Tuesday, January 1st 2019, tariffs of 14 to 20 per cent on Australian wine imports have been fully eliminated by ChAFTA.
The boom of Australian wineries in China is expected to further spark promotion and education Aussie wine products. Hence, the Australian wine industry will most likely expand its market presence and increase the market share of Australian wineries in China.
Many believe that the country will soon overtake France as China’s biggest source for imported wines.
Sources: Australian Ministry of Agriculture and Water Resources; National Bureau of Statistics of China – United States Division; Wine Australia Organization.
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