As Vinexpo Asia takes place this week in Hong Kong, it is fitting to review the opportunity that exists for Australian wine in these markets – and the resources available to help exporters explore these prospects.
The opportunity on Australia’s doorstep
In the context of declining wine consumption worldwide, it is apt to examine where future growth may be found. According to the Population Reference Bureau, around 60 per cent of the world’s population resides in Asia, representing well over 4.5 billion people. Not only does the region hold the largest cohort of potential wine consumers, the forecast rates of growth in gross domestic product are above the global average (see Figure 1).
Figure 1: Real gross domestic product (GDP) growth worldwide in 2023 with a forecast to 2025, by region
Source IWSR
Although wine consumption in Asia declined by 6 per cent per year between 2018 and 2023, mostly driven by the Chinese market, IWSR is forecasting a 1.5 per cent growth rate per year to 2028 – which is higher than Europe and the Americas (see Figure 2). The recovery of the China market is a key contributor to this forecast growth, while Japan, South Korea and India are also predicted to be important growth drivers. In fact, all markets in the Asia Pacific region are forecasted to grow in value in the next five years, except for New Zealand.
Figure 2: Value of wine consumption by region
Source: IWSR
Another way to look at the forecasted opportunity is to use Wine Australia’s newly re-designed Market Explorer. The “Market opportunities” chart (Figure 3) clearly indicates that the Asian markets (in red) provide some of the best potential growth in imported wine consumption, along with the Americas. In contrast, the European markets (in blue) are mostly in the lower quadrants – indicating low forecast growth.
Figure 3: Size and growth of imported wine markets
Source: IWSR and Wine Australia analysis, available in the Market Explorer
It is important to note that even with the loss of the mainland China market due to high import tariffs between November 2020 and March 2024, Australian wine exports to the Asian region have grown in value by 4 per cent on average per year over the past 10 years. In the 12 months ended March 2024, exports to this region were worth $679 million – making it the most valuable region for exports. All major destinations in Asia, aside from mainland China, experienced value growth during the past decade.
Given that the region is on Australia’s doorstep, Australian wines have a clear competitive advantage when it comes to getting product into market. It is therefore not surprising, that Australia has a high share of imports into some of these markets. For example, Australia’s share of imported wine consumption is 35 per cent in Indonesia, 29 per cent in Thailand and 10 per cent in Vietnam[1].
Mainland China
On 28 March 2024, China’s Ministry of Commerce (MOFCOM) announced the removal of the import duties imposed on Australian wine to mainland China. This was welcome news to Australian wine exporters and indications of early shipment levels are positive[2].
Wine Australia has commissioned an Export Market Development Guidebook for the China market, prepared by Euromonitor International, as an addition to the suite of reports on key Asian markets, released in 2021 (available only to levy payers and exporters). This report details market opportunities and challenges, market volumes and dynamics, channel and consumer preferences, distribution structure and pricing and the regulatory landscape.
The mainland China market has changed significantly over the past five years. This is principally due to the decline in the size of China’s imported wine market. According to Euromonitor, “import volumes saw a steep drop of 32 per cent in 2020, due to COVID-19, although the rate of decline gradually slowed to around 20 per cent in 2023, as the economy showed signs of recovery.”
The report predicts that the wine market decline will continue, but at a lesser rate as consumer spending is likely to improve following the creation of 12 million new urban jobs. The fine dining sector is also reported be thriving, offering a good opportunity for premium wines.
“Although Australian wines are likely to face competition from markets such as France, Chile and Spain, the country’s broad portfolio, covering both affordable and high-priced wine, with no comprise on the quality offered, is likely to work in its favour.”[3]
Thailand
An updated Euromonitor Export Market Development Guidebook is also available for Thailand. Wine consumption declined dramatically in 2020 due to lockdowns and a steep fall in inbound tourism. However, the market bounced back strongly in 2022 – to a higher level of consumption than before the pandemic. Consumers are also returning to the on-trade and this channel is expected to be the growth driver of the market in the coming years.
On 23 February 2024, Thailand’s government implemented laws to reduce import duties and excise taxes on wine for the rest of 2024, with the hope of revitalising the hospitality and tourism sectors. The excise tax on wine has been reduced from 1500 baht to 1000 baht per litre of alcohol and should make all wines slightly more affordable. Wine Australia’s Thailand Export Market Guide and FOB to Retail Calculator have been updated to reflect these changes.
Additionally, import duties on all wines under the HS codes 220421 and 220422 have been reduced to zero for all source countries. However, this only provides benefit to Australia’s competitors as Australian wines already benefitted from zero import duties under the Thailand–Australia Free Trade Agreement.
Indonesia
As with Thailand, Indonesia’s wine market is also recovering from a slump in consumption during the COVID-19 pandemic. According to Euromonitor’s Export Market Development Guidebook, wine consumption has grown by 17 per cent on average per year between 2020 to 2023, with strong growth expected to continue. As the sale of wine in supermarkets is prohibited in most major cities, the on-trade is the dominant channel (see Figure 4) while both on-trade and off-trade sales are expected to grow by double digit rates per year to 2027[4].
Figure 4: Wine sales by channel in Indonesia
Source: IWSR, available in the Market Explorer
Unlike Thailand, Indonesia has a strong domestic wine category that has a 33 per cent volume share of the market[5]. According to Euromonitor, local wines have an advantage when it comes to brand presence as they are more easily accessible to consumers through wine tastings and vineyard tours. Alcohol advertising is prohibited in Indonesia, making engagement more difficult for imported brands. However, imported and local wines are both expected to drive growth in the Indonesian wine market in the next few years.
Additional resources for Asian market analysis
Publicly accessible
- Japan and South Korea Market Updates 2024 – get the latest insights on these two markets from Wine Australia and Austrade
- Japan and South Korea consumer insights 2022 – reveals consumer perceptions around Australia and the Australian wine category in these two markets
- Market Explorer – research the characteristics of global wine markets
- Export Dashboard – explore the latest Australian wine export results
- FOB to retail calculator – calculate your product’s retail price based on a chosen “free on board” value for exports to Hong Kong, Singapore, Japan, South Korea, Taiwan, Thailand, India, and mainland China
- Gross Margin Ready Reckoner – calculate your gross margin on exports to Hong Kong, Japan, South Korea, Singapore
For levy-payers and exporters only
- Import market reports – import reports using customs data for mainland China, Hong Kong, Indonesia, Japan, Malaysia, Philippines, Singapore, South Korea, Taiwan, Thailand, and Vietnam
- India Wine Landscapes Report 2022 – Insights on the Indian wine consumer
- Export Market Guides – provides information on duties, taxes, labelling regulations and country-specific export requirements. Available for Cambodia, mainland China, Hong Kong, India, Indonesia, Japan, South Korea, Malaysia, Mongolia, Myanmar, Philippines, Singapore, Taiwan, Thailand and Vietnam.
- Export Market Development Guidebooks – market opportunities and challenges, market volumes and dynamics, channel and consumer preferences, distribution structure and pricing and the regulatory landscape for mainland China*, India, Indonesia*, Malaysia, Philippines, Singapore, South Korea, Taiwan, Thailand* and Vietnam.
*Report updated in 2024
1.IWSR
2.Official export figures for the 12 months to June 2024 will be released by Wine Australia in July.
3.Euromonitor International – Export Market Development Guidebook - China
4.Euromonitor International –Export Market Development Guidebook - Indonesia
5. IWSR
