The Chinese government has imposed anti-dumping and countervailing duty deposits on Australian wines, making it difficult for Australian wines to gain a foothold in the Chinese market. In response, the Australian wine industry, while rushing to diversify its market, also realized that it should not continue to rely on the Chinese market in the future.
Since November 28, China’s Ministry of Commerce has imposed provisional anti-dumping deposits of 107.1% to 212.1% on Australian wines. Then, from December 11 last year, provisional countervailing duty deposits of 6.3% to 6.4% were imposed.
Tony Battaglene, general manager of The Australian Grape and Wine Trade Association, acknowledged in an interview that Australia’s Wine industry has been hit hard by the obstacles to exports to China, and he expects it to take at least four to five years to recover.
“For Australia [the wine industry], the Chinese market is a $1.2 billion [about NT $26 billion],” Bataglan explains. This is by far the largest market. And the import taxes that are being imposed are really preventing us from entering the Chinese market.”
Bruce Tyrrell, managing director of Tyrrell’s Wine, admits that the past year has been the most troubled since his great-grandfather started his business in 1858, thanks to wildfires, COVID-19 and a slowdown in Australian Wine exports to China.
Located in the Hunter Valley of New South Wales, The Tyrael Winery is recognized as one of the few remaining wineries in the industry that does not interfere with the brewing process with modern technology. But in contrast to its conservative approach to winemaking, Tyrael has gone further than many of its peers in diversifying.
“We just commissioned an agent in Taiwan, just before the COVID-19 outbreak, which was six weeks before the outbreak,” Said Tirael. Now, of course, we are stepping up our offensive.”
As relations between Australia and China deteriorate, Mr. Tirael believes there will be no return to the days when the Chinese market alone could be profitable. As early as the middle of last year, he began to go ahead and, in addition to Taiwan, Japan and South Korea, he even began to raid the Uzbek and Indian markets.
Losing China would mean a loss of 8 million Australian dollars (ABOUT NT $173 million) in profit, Mr. Tayrael said. But he stressed that it was better to develop diversified markets than to sit back and wait.
Ubertas Wines, in South Australia’s Barossa Valley, is run by brothers Yuzhi and Chengyan Liu, both from Taiwan, who have not set their eyes on China since they started in the wine industry in 2014.
“Of course, the Chinese market is very large, but people think you can grow so fast in a short period of time, and your relative investment in marketing costs is not low,” Liu explained. It’s not easy for small wineries.”
Mr Liu stresses that building the winery’s brand value was also the reason he refused to rely on the Chinese market in the first place. Relying on the Chinese market, he says, is like “making the wine for one customer”, unable to cater to tastes in other markets, and “a limitation”.
He was convinced that market diversification was a necessary measure to diversify business risk.
Mr Liu also revealed that he refused to rely on the Chinese market because of the realities of running a winery. “We have to take into account that every country imports wine at different times,” he said. “If you rely on the single market, like the Chinese market, they will have a lot of demand from October to November because they are stocking up for the Chinese Year. “After the Chinese year, almost all exports stop, which is actually very bad for a winery’s capital flow.”
In contrast to the prescient views of Messrs. Tyrrell, Yuzhi and Chengyan Liu, most Australian winemakers have only recently woken up to the importance of diverse markets.
“Ninety-eight per cent of the bottled wine that we [Australia] export out of the country now goes to China,” Mr Bataglen said. We really need to find new markets for this product.” He said the introduction of margin requirements by the Chinese government had taken many Australian wine producers by surprise.
Mr Bataghlen believes that diversifying markets is the only way forward for Australia’s wine industry.
“The path to diversity is difficult, it takes time, it takes resources,” he said. It takes time to invest in new markets. Our medium-term objective is to expand our domestic market, plus existing important markets such as the United Kingdom and the United States, as well as markets in Southeast Asia and North Asia that we believe have export growth potential in the long term. We need a comprehensive market development plan.”
Bataglan stressed that Australian wines are competitive in the international market.
“Australia is characterized by its diverse climate, vast territory and wines produced in all parts of the country,” he said. So we are able to produce fine wines at all price points. Few countries are able to do this, and at the same time maintain quality stability and be pleasantly surprised by their diverse landscapes and diverse climates.”
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