A view of several bottles of Australian wine brand Mountadam Photo: VCG

The spread of wildfires in Australia has caused concern around the world, especially regarding the survival of the country's wine industry. But industry insiders said bushfires have caused limited impact on the Australian wine industry and its exports to China are expected to rise this year. Australia will likely remain China's biggest wine importer nation.

Wine Australia, an Aussie government authority that promotes and regulates the wine industry, stated a maximum of 1,500 hectares of vineyards - around 1 percent of Australia's total vineyard area - are within the regions affected by the blazes, according to a report sent to the Global Times.

"The fires in Australia are concentrated in the north and central region, mostly non-wine regions," Yang Zheng, senior analyst of beverage industry of Tmall, told the Global Times on Wednesday. Tmall is a B2C online platform of Chinese retail giant Alibaba.

"It would take a while to assess the impact on vineyards but what we had been able to determine was that at the most less than 1 percent of Australia's vineyard area was affected by fire," stated the joint statement by the Wine Australia and the Australian Grape and Wine Inc sent to the Global Times on Monday.

Anita Poddar, Corporate Affairs manager of Wine Australia told the Global Times on January 12 that "at this stage there is no further update on the situation."

While vineyards have suffered little from bushfires, analysts say the quality of the wine may be affected, thus leading to a reduced value.

"The impact of the heat on the vines is hard to measure. I think the price of Australian wine will decrease this year because the market knows that the quality of Australian wine is going to go down because the grapes don't get enough sunshine. The quality of the wine affects its price," Hao Yan, a market observer who has lived in Sydney for more than 10 years, told the Global Times on Monday. 

Chance to go further

China became the largest importer of Aussie wine in 2019. A total of 43 percent of Australian wine by value was exported to China by September 2019, according to data from Wine Australia.

Australian wine exports to China reached a record value of $1.25 billion as of October 2019, an increase of 18 percent year-on-year, according to a report by Wine Australia released in October 2019.

The market share of Australian wine in China's imported wine market has also increased from 13 percent in 2015 to 24 percent in 2019, making it one of the most important sources of wine imports in China, industry statistics showed.

Australian exports have performed strongly since the conclusion of the China Australia Free Trade Agreement in December 2015, according to Australian Trade and Investment Commission.

In the first five months of 2019, the value of Australian wines exported to the Chinese mainland surpassed that of France for the first time, becoming the largest source of imported wines in China, said Wine Australia. 

"Following import trends in China of wine, it is expected that Australia will remain China's largest importer of wine this year," said Yang.

"Global Trade Atlas figures for the year ended in August 2019 showed that overall wine imports declined by 11 percent in value in Australian dollar terms, with French wine being the biggest contributor to the decline. Australia's long-term growth trend, coupled with France's sudden decline, has led to Australia becoming the number one source for wine by value in China's imported market for the first time," said Andreas Clark, Wine Australia Chief Executive Officer.

Wine imports diversified

Australian wine is not the only competitor of French wine. Wine products from other countries are eating up the market share of imported wine in China.

"The imports of wine products from emerging countries, Australia and New Zealand have seen a rapid growth in China in recent years, which have been gradually eating into the market share of French products," said Yang.

"French wines have been hit hard by the impact of tariffs and due to young Chinese consumers being more likely to choose personalized wines from countries other than France," Yang added, claiming a growing number of Chinese view the fame of French wine as something of a cliché.

"With the recent progress in trade negotiations between China and the US, tariffs on US wines will go down, resulting in an increase of US wine imports. But it will take time for the market to react," said Hao.

A number of countries have benefited from a low-level tariff on wine, including Australia and New Zealand. These countries have signed free trade agreements with China. Australian wine has benefited from a zero tariff since January 1, 2019.

Other countries, especially Central and Eastern European countries under the Belt and Road Initiative and the China and 16 Central and Eastern European Countries (CEEC) or 16+1 cooperation, have witnessed closer ties in business, including the wine industry.

Hungarian wine Tokaji Aszú, one of the most famous wine brands of the country, is one such example.

"China, for our Aszú wines, is a very strong market. We have been exporting to China for nearly 20 years and China has become our 4th largest market," Charlie Mount, Managing Director of Hungarian wine maker Royal Tokaji, told the Global Times on Tuesday.