Trade wars and Covid-19 are challenging the Australian wine industry, with the US and China markets slowing down their consumption, according to Rabobank’s latest Wine Quarterly report.
The first half of the year will be particularly challenging for Australian wine exporters, while the global wine industry continues to face uncertainty across international trade throughout 2020, said Rabobank senior wine industry analyst Hayden Higgins.
Despite a boom in wine values to China helping to stabilise the impact of falling US consumption of Australian wine, the impact of Covid-19 on China – Australia’s largest wine market – continues to cause disruptions.
The latest Q1 report notes that bulk wine exports decline by 12 per cent last year in volume but rose three per cent in value. There has also been a 17 per cent decline in volume to China but sales have increased in value by 12 per cent.
“A major element affecting the global wine industry in recent months has been stagnant domestic demand in the United States, but now we are also seeing a shut-down in China due to the Covid-19 outbreak which is adding to the slowdown in Chinese wine imports experienced in 2019,” Higgins said.
“The coronavirus outbreak is not only affecting actual consumption and trade flows of all goods, including wine, at the moment, but its economic consequences may undermine demand for wine even after the disease subsides.”
The report found trade tensions between the US and China, Brexit negotiations, and trade agreement negotiations all had an impact on wine sales and export volumes during 2019, which will continue in 2020.
The industry must quickly find a way to boost consumption in other key markets globally, the report found, and broaden its appeal to attract new consumers.
Higgins said further investments to build out e-commerce capabilities and improve brand-building skills can engage consumers with brands differently.
