Australia's grave mistake in wine: a lesson for Italy too
A couple of very interesting articles have recently come out about Australia's return to the Chinese market following the removal of Chinese taxes on its wines.
In both articles (one by W. Blake Gray on Wine Searcher; and one by Eloise Feilden on The Drink Business) a strategic error by Australia clearly emerges: having focused its exports on very few markets, with an excessive focus on what later proved to be its “tomb”, China.
And the collapse of the Chinese market was well described by Eloise Feilden: "Before the imposition of punitive taxes in 2020 (which reached up to 218.4%), China was the most valuable export market for Australian wine, with exports reaching AUD 1.3 billion and 121 million liters in volume." "This stratospheric increase in import taxes," Feilden continues, "has caused a drastic decline in Australian wine exports to China, falling to just AUD 10.1 million and 1.4 million liters in 2023. The number of exporters has also plummeted from 2,198 to 117.
Meanwhile, however, China's wine market has suffered further contraction. According to data from Trade Data Monitor, total wine imports into China fell from 688 million liters in 2018 to 248 million liters in 2023. In value terms, the imported wine market shrank from AUD 3.3 billion in 2019 to AUD 1.5 billion in 2023. Major exporting nations—France, Chile, Italy, and Spain—also saw significant declines in exports to China in the year ending December 2023.
But the drastic decline in the wine market in China would not have been so dramatic for Australia if its wine sector had had better strategic vision.
"For years," writes W. Blake Gray, "the Australian wine industry has played a dangerous game of 'all in one basket,' relying almost exclusively on the Chinese market to save its wine economy. But as recent history teaches us, putting all your eggs in one basket has never been a wise strategy. And as China reopens its doors, another sleeping giant—the American market—remains an undecipherable enigma for Australians."
"The US market," Blake Gray continues, "with its insatiable thirst for novelty and its constant search for authentic wines and unique stories, remains largely unexplored by Australia. Not because there's a lack of quality wines, but because there seems to be a lack of boldness to present them."
How can we disagree with the talented journalist at Wine Searcher, but could we somehow launch the same reproach at the Italian wine industry?
Our exports are certainly more diversified than Australia's, but in fact, 90% of the value of our wines on international markets is concentrated in North America and the European Union. Compared to France, their export value is 23% to the US and almost the same to Asia, while ours is almost 30% in the US but drops to just over 7% in Asia.
But if we then look at the percentages of exports to areas such as Central and South America (2%), Africa (0.3%), Oceania (1.2%) it is easy to understand that we will certainly not be like Australia but there is no doubt that we must necessarily increase our outlet markets.
In this latter regard, the support of the CMO for the promotion of third-party wine should have been much more useful, but the failure of this measure (or rather, of how we have implemented it) on this front is clear for all to see.
