The ongoing dispute between Australia and its longstanding trade partner is creating unprecedented opportunities for competing nations to increase their market share, according to Rabobank’s Q4 Wine Quarterly report.

Over the past seven years, Australian wines had dramatically increased their market share in mainland China, due to the free trade agreement signed in 2015. Yet relations between the two countries have soured in recent times; tariffs and anti-dumping duties now range from 117% to 218.4%, which caused an 88.6% drop in imports in the first seven months of 2021.

The report notes that: “Following the tariffs imposed on Australian wines, wines from other countries have gained ground to varying degrees. French wine, as one of the biggest beneficiaries, has seen strong growth, both in value and volume. Along with more affluent and sophisticated consumers, demand for Burgundy and Bordeaux wines continues to increase. Champagne and Rho?ne Valley have also benefited from this good dynamic.”

Stacie Wan, industry analyst at Rabobank in China, commented: “Although we do expect consumption to increase again, it is clear that the market will not return to the pre-pandemic status quo. The competitive positioning of suppliers in the market – both foreign and domestic – is being completely rearranged.”

According to Rabobank's study, Chile has also benefited greatly from this ongoing spat, and is likely to gain further share to become China’s second-largest supplier of wine by 2025.

It states: “Chilean wine used to be exported to China as a private label, or original equipment manufacturer (OEM), using a low-price strategy to attract Chinese consumers. However, with the trend towards premiumisation, Chile is constantly restructuring its exports to change the perception of its cheap quality, as evidenced by a 22.9% increase in prices over the past year.”

The reported added that leading wineries have been aggressively expanding into the mid- to high-end Chinese wine market to capitalise on this unprecedented opportunity. Concha y Toro launched Concha y Toro Cellar Collection (Cabernet Sauvignon and Syrah) and Concha y Toro Master Edition (Cabernet Sauvignon) in the Chinese market in August, in order to increase its presence in the premium segment. In addition, Italy and Spain also benefited from the drop in Australian imports.

However, the study did concede that if relations thaw between China and Australia, the Antipodeans could probably recover lost ground.

“The assumption that France, Chile, and other countries have a long-term opportunity to gain market share in China is based on the current relations between China and Australia. The longer the anti-dumping duties remain in place, the harder it will be for Australia to reclaim all of its former share,” said Stephen Rannekleiv, global strategist – beverages, at Rabobank.