Latest figures on Australia's wine export performance show a steep 12 per cent decline in sales to China, underlining the earnings impact of the central government's austerity drive and crackdown on ostentatious banquets to the local wine sector.
Australia's winemakers have warned since last year of slowing demand in one of its most important growth markets, with other international beverage companies across wine and spirits also forced to scale down their earnings targets as Chinese drinkers stay away from upmarket restaurants, bars and tone down their schmoozing of government officials.
Wine Australia said on Wednesday morning that exports to China fell 12 per cent to 37 million litres for the year ending March 2014, worth $217 million – a modest 2 per cent increase in value.
"The austerity measures on government bodies have continued to impact on the mechanics of the imported wine sector," Wine Australia's chief executive, Andreas Clark.
"As a result of this, we encourage Australian wine companies to work with their importers and distributors on long-term, brand-building strategies in China.
"This will help ensure that Australian wine maintains the highest average value per litre of the eight largest imported wine countries now and into the future."
There was some good news in the export figures, however, with a concerted focus by the sector on higher-priced wine – and a move away from cheap commercial bulk wine – delivering some positive results.
The average value of wine exports continued to rise, up 1 per cent to $2.59 a litre, due mainly to a 6 per cent increase in the average value of bottled wine to $4.68 a litre.
Mr Clark said that while volume was declining at the lower end, increases in volume and value at the higher end showed the industry's efforts to create interest in Australian wines at the higher end of the market were paying off.
When it came to key export markets, in the US the average value of Australian exports increased by 15 per cent although volumes fell by 21 per cent. In the UK, export volumes declined by 2 per cent in line with the overall decline in UK wine consumption. However, the average value of bottled and bulk exports to the UK increased.
But it was China, which for a number of years has been the sector's key growth engine, that has worried winemakers both in Australia and overseas.
Pernod Ricard, the world's second-biggest drinks group and owner of Jacob's Creek, in March warned that beverage sales were flat since the Lunar New Year, citing the austerity drive and crackdown on luxury gift giving.
In October, Treasury Wine Estates, the world's largest pure-play winemaker and owner of Penfolds and Wolf Blass, warned shareholders that consumer demand for wine in China had softened in line with souring demand for luxury products ranging from beverages to fashion.
And it's not just wine. Data from the Scotch Whisky Association this week revealed that sales to China slumped 30 per cent to £51 million ($90 million) in 2013.
