Chinese market keeps wine exports flowing

Australian wine exports fell to a record low in line with global consumption trends, but the Chinese mainland remained its largest export market by value in the pillar sector, according to the latest analysis.

The exports fell year-on-year by 7 percent in value to A $2.3 billion ($1.6 billion) and 6 percent in volume to 598 million liters in the year ended June 2026, statutory authority Wine Australia's export report released on July 29 showed.

It was the first time that export volume had fallen below 600 million liters since 2004, with the fall mirroring "a broader global trend of declining wine consumption over the past decade", it said.

Peter Bailey, market insights manager at Wine Australia, said the challenges facing Australian wine exporters are not unique, with other wine-producing nations facing the same conditions.

Data from multiple sources suggested that the decline in wine consumption globally reflected changing consumer behavior that is "reshaping demand around the world", he said.

'Historic downturn'

The total export figures "reflect increasingly difficult trading conditions across many of Australia's key export markets, driven by a historic downturn in global wine consumption", according to Wine Australia.

Worldwide wine consumption has fallen to its lowest level since 1961, as consumers increasingly moderate alcohol intake, face cost-of-living pressures and shift toward alternative beverages, it said.

While global trading conditions remain challenging, Australian wine continues to perform relatively well in many key markets, Bailey said.

The Chinese mainland remained Australia's largest export market by value, despite exports falling 15 percent to A $756 million, according to Wine Australia.

The Chinese market is no longer being driven by the restocking of Australian wine, Bailey said, amid "a more mature and demand-led phase" that also reflected a smaller and slower-growing sector.

Michael Harvey, senior analyst in dairy and consumer foods at global agribusiness banking cooperative Rabobank, told China Daily that the wine sector is going through a period of rebalancing and resizing.

"There are some weather conditions that played a role, but there's also been clearly a structural decline in the size of the industry. So we're actually seeing some vineyard removals, which is why we're seeing reduced production in Australia to reflect the challenging operating environment," said Harvey, who is based in Melbourne, Victoria state.

"Margins are under pressure for a lot of the wine, a lot of the vineyards and growers, which is why we're getting a supply response. So that naturally has led to less production," he said.

"There's also a structural reset in terms of the amount of alcohol we're consuming, so that's a trend you've seen in a lot of key markets and China would be part of that," Harvey said.

"At some point in time it'll find a better balance and you'll start to see some stabilization," he said, adding that there are still segments in the sector that are performing well.

"Premium wines are performing better than some of the other varieties, so it's not a linear decline everywhere."

Jack Wu, managing director Greater China for major Australian winemaker Treasury Wine Estates, noted that China has long been an important market for Penfolds, and the brand has built a strong connection with Chinese consumers over many years.

The winemaker is headquartered in Melbourne and includes the popular Penfolds label in its portfolio.

"We're focused on growing that relationship for the long term by staying close to how people are shopping and enjoying wine, supporting healthy and sustainable channels, and creating more occasions for consumers to discover and share Penfolds," he said.

alexishooi@chinadaily.com.cn