Australian wine growers are diversifying into other markets more than six months on from crippling tariffs that effectively closed-off the lucrative Chinese market.
- China’s tariffs on Australian wine have effectively closed off the market
- The industry is diversifying into new markets
- The federal government has announced its intention to take China to the WTO over the tariffs
James Robson from Ross Hill Wines near Orange in the NSW Central Tablelands would usually sell 20 per cent of his wine abroad, with China the destination for 85 per cent of all exports.
That stopped abruptly last year when China announced crippling tariffs on Australian wine.
“It was a big shock,” he said.
“We’re not even close to replacing what we were doing in China, but we are starting to see some really good opportunities,” Mr Robson said.
Mr Robson said the blow had been softened by strong domestic sales and supply issues from the drought, but he was working on finding new markets to replace his Chinese customers in the long-term.
Ross Hill Wines has recently sent its first order to the UK and was already working on a second.
“Australian wine sales in the UK have absolutely gone through the roof,” he said.
Mr Robson said he was also on the ‘cusp’ of a deal in South Korea and was hoping to develop other Asian markets like Vietnam and Singapore.
“It doesn’t cover the [Chinese] volume, but I think it’s really important for our industry because what we’re doing is diversifying.”
“I think long-term this is something that our industry will recover from but it’s just going to take a bit of time,” he said.
‘Bright spots on the horizon’
Brokenwood Wines in the Hunter Valley usually exports about 10 per cent of its wine.
Senior winemaker Stuart Hordern said they had also focused on domestic sales since the pandemic restricted international travel.
“We haven’t been able to do any international trade work for 18 months so that’s certainly changed our focus, he said.
Mr Hordern said despite the difficulties with China, there were still “bright spots on the horizon” when it came to international trade.
Mr Hordern said he welcomed the decision by the Australian Government to refer China to the WTO.
“Exports are a small percentage of our market but we certainly want to see access to markets wherever we can,” he said.
The United Kingdom is now Australia’s largest wine market in both volume and value, according to Tony Battaglene from Grape and Wine Australia.
“The UK has grown about 30 per cent in the last three months,” he said.
Mr Battaglene said the UK free trade agreement would be worth about $50 million to the industry once all the tariffs were phased out.
“The most important thing about free trade agreements is the growth in awareness.
“As soon as you get a free trade agreement, you always see a boom in exports because the importing country becomes more aware,” Mr Battaglene said.
The industry has been working on developing markets in South Korea, Vietnam, Thailand, the United States and Canada following the tariffs.
“Obviously, China was paying top dollar for red wine and none of these markets can, in the short-term, compensate for that,” said Mr Battaglene.
He said South Korea was one market showing “great growth.”
“It’s got a population that likes wine and it’s a fairly wealthy nation that’s well educated — a nation that will really appreciate our wine,” he said.
Despite the great “inroads” the industry was making, Mr Battaglene said producers were still concerned about the long-term effects of losing the Chinese market.
“People are still very worried. We don’t think we’ve seen the full effects yet.
“The next vintage in 2022 will be a real tester for grape growers as we see how well we’ve managed to diversify,” Mr Battaglene said.