Photographer: James Buck / Bloomberg
Photographer: James Buck / Bloomberg
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China’s attack on Australia’s wine industry is becoming more and more sensational.
Recent Round Rates – This may push Overall import taxes exceed 215% – outpacing Australian winemakers. Over the past 25 years, China, with its appetite for the growing middle class and the cold region of Shiraz, Cabernet Sauvignon and other big reds, has become Australia’s largest and most avid customer. In 2019, France surpassed France as the country’s top exporter in terms of value; Last year, China spent $ 1.2 billion ($ 904 million) on imports, which accounted for 40% of Australia’s total exports, according to Wine Australia.
“They love our style, they know our tastes,” said Mitchell Taylor, who makes up one-fifth of its annual export earnings from China, based in the Clare Valley in South Australia. “They have a very intelligent palate, so wine is a natural part for them to explore and enjoy.”
Precious taste
Australia mostly exports premium wine to China
Source: Wine Australia, Bloomberg Calculations
Those buyers are quickly disappearing. Rumors of impending tariffs China’s purchases increased by 94% in October, according to China’s customs data; Australian winemakers increased their associated 40% prices. Official data for November are not yet available, but these measures are expected to be an effective execution, wiping out demand and reducing prices.
The Australian industry is still reeling from the Bush fire and corona virus epidemic that engulfed the vineyards in early 2020 and is reviewing its entire global distribution plans. Melbourne-based stocks Treasury Wine Estates, the most popular brand for the Benfolds brand, fell 12% following the first tariff announcements.
Emergency plan
The umbrella group, which owns 19 offenses, including Wolf Plus and Snoop Dog, among others, The emergency plan includes redistributing its Benfolts pin and icon labels to other luxury markets and accelerating the drive to produce more wine in other countries to avoid obligations made in Australia.
Treasury CEO Tim Ford said in a call with investors on November 30 that China’s demand for Benfolds would continue at one level, and reaffirmed a “long-term commitment” to the market. “We are very disappointed to see our business, the business of our partners and the Australian wine industry in this situation.”
Vineyards in the Yarra Valley of Victoria.
Photographer: James Buck / Bloomberg
The United States and the United Kingdom, Australia’s next largest customers, are unlikely to offer much comfort. While the luxury market is cornered by California and Europe respectively, Australia is more popular for bargain labels like the Yellow Tail. “We really want to sell the Australian wine luxury story,” Taylor said.
According to Wine Australia, nearly two-thirds of Australia’s exports to China were $ 10 or more per liter, while growth in exports to the UK and US came mainly from the sub-A5 segment.
New market
Entering a new market, especially with existing options, does not happen quickly. Winemakers spend many years talking to distributors, retailers, and connoisseurs about new flavor profiles and the uniqueness of Toro. The pitch is different too, Taylor said. Regular gift-giving and fancy dinners worked in China, while Americans watched wine press and global competitions, with extensive advertising and publicity.
Alistair Burbrick, CEO of Tahbilk Wines in Central Victoria, said, “We all need to see how we are transforming ourselves and restructuring other markets.” He is now doubling down on the domestic market, but sees opportunity in another emerging market: India. The tariffs there have so far kept most exporters in the Gulf, but he sees the long-term potential in changing consumer preferences and the rise of the younger, global generation.
“We are Realize That liquor market will grow just like China, ”said Burbrick, adding that his company was better at weathering the storm than small exporters. “Whichever way you look at it, there will be little pain,” he said. “Our good friends in China pulled the rope from the guillotine.”
Meanwhile, Chinese importers and retailers will look elsewhere. The Guangdong wine dealer gave his family name Ni, saying he had raised his price on Australian wines and planned to import from other countries, including France, Chile and Argentina.
According to Taylor, trade with China will double “in the near future”. “China has always been the driver of our statistics,” he said. “We know winemakers in France, Chile and New Zealand are excited.”
– With the help of New Shopping