Australian winemakers hail axing of Chinese tariffs, but warn it's no quick fix for struggling industry

Many growers are struggling and say the end of the tariffs will not be enough. (Landline: Tim Lee)

Wine producers across the country have welcomed an end to China’s duties on Australian wine.

China made the announcement on Thursday, with the heavy tariffs ending on Friday.

Wine Australia chief executive Martin Cole said he expected Australian wine would quickly be getting into China.

“I think we’ve been waiting with bated breath for quite a while, but absolutely great to have that confirmed,” he said.

“Some businesses have been preparing to go into the market from Hong Kong so I think things will start flowing pretty quickly.

“It’ll take some time to rebuild the pipeline, there’s some additional requirements I think in terms of the need for self-registration, et cetera, so we’ve updated our export guide.”

Mr Cole said the introduction of duties caused the loss of 30 per cent of the sector’s export business virtually overnight.

“We had something like 20 per cent of the share of imported wine into China, which was worth $1.2 billion.

“It really was about premium red wine so that’s made a huge impact on our business.

“On top of that, think of COVID, think of inflation and all of the usual things that you deal with in an agricultural sector, so it’s been a really tough time.”

But Dr Cole warned that while China was a very important market, it was currently a fraction of what it was.

“The imported wine market’s down to about a third of what it was.

“There is a downturn in the economy, so that’s certainly part of it.

“I think also in terms of reopening of the economy there, reopening of tourism and the on-premise businesses as well will be part of that.

“We are seeing that in other markets as well, similar sort of trends.”

Dr Cole said, however, that the sentiment for Australian wine remained very strong.

‘The most difficult stage in my career’

South Australia is the nation’s biggest wine-producing state, and local producers have cautiously welcomed Beijing’s decision.

The state’s wine exports to China peaked in October 2020 — a month before the tariffs were introduced — at $946 million, which made up almost half of SA’s global wine exports, according to the state government.

By January 2024, they were valued at a mere $2.8 million.

Owner of Taylor Wines in SA’s Clare Valley, Mitch Taylor, welcomed China’s decision.

“This opportunity will mean a lot for our family business to now re-engage with the opportunities that China presents,” he said.

“It’s probably been the most difficult stage in my career [the tariffs], since working in the family business for 30 years.”

The tariffs have forced many Australian producers to re-evaluate their export strategies.

“We will look at the whole region and not try to specialise too much in the Chinese market,” Mr Taylor said.

“A lot of hard work [has been done] there in the past, so it will be good to try and rebuild those relationships in the market.

“We will build up trust, but saying that we will [also] be looking to another markets … to make sure we’ve got a good spread of our wines in all the key Asian markets.”

No quick fix 

In SA’s Riverland region, some producers have been getting paid 1970s rates amid a glut of red wine, with growers being offered as little as $120 a tonne.

To put that in perspective, production costs are estimated to be about $300 a tonne.

Riverland grape grower and entrepreneur, Yianni Koutouzis, who owns Sixty Eight Roses, said he and other growers were facing financial stress and uncertain futures in the industry.

He said the removal of the tariffs would not be an immediate fix.

“It’s a crisis at the moment in the Riverland, it’s a very, very serious matter, and it’s something that needs to get addressed pretty quickly, and hopefully this will give some sort of relief for us.”

Calls to expand export markets

WA winery Ferngrove — which is majority Chinese owned — said it was also hit hard by the tariffs.

“We had to refocus, and put a lot more effort back into domestic markets, a lot more focus back into our direct-to-consumer business, and continue with our export markets in the UK and Asia,” managing director Andrew Blythe said.

Mr Blythe agreed that wine exports to China would fail to reach the same heights as the pre-tariff era in the near future.

“The economic landscape in in China has certainly changed a lot over the last three, four years,” he said.

“So we certainly won’t be going anywhere near the same volume to where we were shipping before.

“We’re kind of aiming for around 30 or 40 per cent of what it used to be.”

Mr Blythe also said he believed the industry needed to learn from the saga of the last few years, and broaden its markets.

“A lot of those South-East Asian markets, I would certainly be focusing on them,” he said.

“There’s low, low hanging fruit in those markets.”