Almost 860 Olympic swimming pools could be filled by the Australian wine glut as growers continue to grapple with Chinese trade sanctions, according to a new report.
The oversupply in Australian wine has grown to 2 billion litres, or 2.8 billion bottles, and even the removal of tariffs by China would still leave the industry struggling, the Rabobank study said.
The Asian powerhouse economy was the most valuable market for Australian wine exports in 2020, but then one year later China imposed anti-dumping tariffs as political and trade relations between Canberra and Beijing hit a new low.
In a double blow, Australian wine exports to the UK slumped during the same period as the country came out of its pandemic lockdown and people consumed less alcohol from home.
From a whopping $898 million in value for 2020, bottled wine exports to China have been reduced to only $8.1 million in the year to June 2023.
And Australian wine exports to all markets have collapsed by 33 per cent since China's trade hit on the industry.
China's decision to remove tariffs on Australian barley earlier this month raised hopes the imposts on Australian wine exports may also be scrapped.
But even if that happens, Australian growers face a diminishing appetite for wine in China, the report found.
"Chinese consumers began transitioning away from wine as part of a broader decline in alcohol consumption on a per capita basis, however, declines were greater for wine than beer and spirits," RaboResearch associate analyst Pia Piggott said.
"COVID lockdowns and the economic slowdown curbing discretionary spending have also played a role in declining consumption to levels not seen since the 1990s.
"Despite only Australia being hit by tariffs, the past five years has seen volume declines in imports from nine of the top 10 supplying countries, as consumers become more price sensitive."
And wine exporters are facing tougher conditions in the UK - one of its most valuable markets.
New alcohol duty rates imposed by the British government will outweigh any discounts gained by the Australia-UK Free Trade Deal.
The wine glut means the Australian industry will continue to struggle and Rabobank expects more vineyards to be put up for sale.
"To return to balance and profitability, acreage needs to be reduced," the report said.
