CHINA has ended the punitive 200 per cent tariff on Australian wines which has crippled the grapegrowing and winemaking industry for the past three years.
While the move was welcomed with relief and anticipation, experts say it may not be the silver bullet many had hoped.
Since China slammed the door in the face of Australia’s wine industry in March 2021, it has seen more than $1 billion revenue a year evaporate.
North West Farmer wine writer and Tresco West vineyards owner Colin Free said growers were relieved the levy on wine imported by China has been removed.
However, Mr Free said the tariff was probably the reason one of Australia’s largest wine producers “chose to pick up their bat and ball and play more in other countries rather than support the local producers who enabled the company to reach the status it had become”.
He said it was great the levy has been removed, but growers were realistic and “know the products of other countries are on the shelves where ours were”.
“We don’t only have to regain that shelf space, but at the same time China’s wine consumption has dropped, as it has everywhere, due to economic issues,” Mr Free added.
“The fact wineries have chosen not to take up the massive amount of fruit that’s still on vines this year shows they are nervous and are not prepared to take the risk on producing extra wine that they cannot sell.” ‘
“Some of the low prices offered for reds this year not only shows the lack of confidence in the industry but some of the prices are simply an insult to the producers who care so much for the industry they are devoted too.
“In summary, I’m relieved the tariff has been removed and the industry can now gain some optimism, but we also know the industry still needs to lose about a quarter of all wine grape plantings to achieve a level of supply/ demand balance.”
Murray Valley Winegrowers chief executive Paul Derrico said while the news from China is cause for a major celebration, the industry will have to wait and see how this all pans out.
Mr Derrico says China’s announcement is “great news, so welcome for the industry – indeed it’s not just great news for grapegrowers and winemakers, it is equally great news for the country because the ripple effect here is significant for allied and support industries and many regional towns not just in our patch but everywhere wine grapes are grown”.
“It will certainly mean a lot to the local economy around Swan Hill and while there are challenges ahead, this is a fantastic start and huge step in the right direction,” he added.
“Unfortunately the announcement is too late to help the current vintage but let’s hope Australian wine can recover its share of the Chinese market and expand on that.”
And some of our region’s major players agree.
Andrew Peace Wines sales manager George Dajczer described the news as “a welcome opportunity to boost wine sales”.
However, Mr Dajczer expected it would “take longer” to get things back to normality with China, whatever that might have been.
He has been talking with people since November in anticipation of the tariff borders coming down but he still believed rebuilding the China connection would almost be a case of “starting over”.
“There will be an increase in sale but it will probably be six to 12 months before we get a clear picture of what China circa 2024 is looking for,” Mr Dajczer said.
“But I suspect it will help us move some red wine, which has been building up around the country, although we are fortunate to have only reasonable supply of red on hold,” he added.
“There is no doubt the Chinese economy is softer but we will be concentrating on the mid to higher level wines which should serve us better than the cheaper entry range.
“Perhaps the overall best news is everything has a flow-on effect and this news will help commercial grapegrowers, small rural and regional economies, allied and support industries so yes, this is a really good news story for a lot of people.”
At Buronga, Duxton Vineyards general manager Wayne Ellis said while the Chinese market had “been choked off” for the past three years, his business had a number of Chinese customers “waiting to go”.
Mr Ellis, whose company runs about 2500ha of vines – and counting – said they had been talking with people in China for the past six months, “so they must have known change was in the wind”.
“About 35 per cent of what we do is export, so we would love the opportunity to get back into China and build a bigger slice of that market,” he added.
“Other countries have tried to take Australia’s place, the Chinese have tried Chilean and South African wine, but they still prefer ours – we just need to have that small reality check that overall demand in China has gone backwards.”
KEY FACTS
Australian wine exports to mainland China peaked at $1.3 billion and 121 million litres in the 12 months to October 2020. Since the tariffs, Australian exports to the market have fallen to 1.4 million litres valued at just $10.1 million in the 12 months ended December 2023. The number of exporters to the market decreased from 2198 to 117 in the same period. (Source: Wine Australia)
Australian wine was the number one imported wine category in mainland China with a third of the market value in 2020. Since the imposition of the duties, no other country’s wine imports have replaced the volume of wine Australia exported to mainland China. (Source: IWSR)
According to official import statistics from Trade Data Monitor, total wine imports to China have fallen from 688 million litres in 2018 to 248 million litres in 2023 – a third of what it was five years ago. (Source: Trade Data Monitor)
In the past 12 months, the total volume and value of wine imported by China continued to decline. The Chinese economy has slowed, and consumer confidence is low. (Source: Trade Data Monitor)
SPECIAL WINE REPORT IN NORTH WEST FARMER’S APRIL ISSUE
