Australia's bullish billion dollar a year wine trade to China has sobered up in dramatic style, shrinking to be worth a measly $4 million in December.
After a big buying splurge by Chinese importers in September and October which pushed monthly export figures to $182m and $194m respectively, China's thirst for Aussie wine has almost dried up as harsh new import tariffs add between 100 per cent and 214pc to the distribution cost of bottled products.
Australia's total 2020 wine export figures would have been much worse if not for Chinese wine distributors stocking up early on orders soon after Beijing's contentious tariffs were flagged in July.
Their rush of buying activity coincided with a surge in exports to Britain where that market's coronavirus lockdowns triggered a jump in take home retail sales of Australian product, according to peak industry marketing and research body Wine Australia.
Unlike China, British demand has stayed relatively robust, lifting the UK's total import values for the year by almost 30pc to $456m.
Britain has overtaken the US as Australia's biggest value export market after China, although the coming year is likely to bring more changes to our top overseas customer rankings as the tariffs bite harder and exporters seek new markets for the wine they once shipped to the Chinese.
Market revival
In fact, the slide in exports to China has already been partially offset by the highest European sales values in a decade and improved earnings from North America.
Australia relies on export markets for almost two thirds of the wine we produce.
China's sharp drop in consumption in the final two months of last year saw the overall value of its Australian imports sink 14pc to $1.01b in 2020.
Volume fell 29pc to 96 million litres, or by 10.7m nine litre case equivalents.
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Wine Australia's chief executive officer Andreas Clark expected exports to China to remain low, affecting sales figures throughout 2021.
The tariffs, imposed in late November saw that month's sales drop to $58m, then fall much further to $4m in December - well down on the $135m and $173m recorded in the same months in 2019.
Overall, the value of Australia's global exports ended last year down 1pc, at $2.89b, with the average price per litre also down 1pc to $3.87/litre (free on board).
However, volume lifted 0.5pc to 747m litres, largely because of the UK's increased orders which further bolstered its ranking as our biggest volume wine consumer.
Much of the 266m litres exported to Britain last year were shipped in bulk by big wine companies such as Treasury Wine Estates, then bottled primarily for sale through local supermarkets and liquor retailers, or for re-export to mainland Europe.
Short-lived record
Mr Clark said despite the COVID-19 pandemic, Australia's total export results had achieved a record year-on-year value of $3.1b when orders from China and Britain hit their peak in the third quarter.
The previous highest 12-month sales had been $3b back in 2007.
Significant growth in exports to Europe - up 22pc to $704m last year - was backed up by a 4pc rise in US and Canadian consumption to $628m, and an 11pc rise in Oceania sales to $115m.
Aside from mainland China's sales decline, other markets in Australia's top five exporter rankings - the UK, USA, Canada and Hong Kong - all grew in value.
"Wine businesses are resilient and are already adapting to these changing conditions, increasing their engagement in markets other than China, particularly the UK, USA, Canada and the domestic market," Mr Clark said.
While there was a decline in export values across most price points, he said the category under $2.50/litre was a notable exception growing 17pc thanks to increased shipments to the UK, New Zealand, Scandinavia, Germany and Canada.
UK sales were also bolstered by importers rushing to move stocks for re-export to Europe prior to Britain leaving the European Union last month, when they expected to face higher import duties on the continent.
Mr Clark said US sales, which had been sliding since 2016, increased despite the widespread effects of the pandemic and the political turmoil engulfing the country last year.
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Andrew Marshall
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
