Corks are popping, glasses are clinking, toasts are being raised — and, very soon, top drops will be boarding boats.
That’s the message from some of the country’s premium grape-growing regions, where producers are cautiously exultant following news of China’s decision to abolish heavy tariffs on Australian wine.
“Good Friday turned into great Friday, the Easter bunny came early, and I thought, ‘Well, I better go and open a better bottle,'” said McLaren Vale winemaker Chester Osborn.
Mr Osborn, from D’Arenberg winery, said the trade barriers imposed on Australian wine when the bilateral trade relationship with Beijing soured in 2020 and 2021, had a multi-million-dollar impact on his business.
But now that the tariffs are being removed, Mr Osborn does not expect it will take long for shipments to resume.
“We had orders, already paid for, sitting in the warehouse — and they’re still sitting in the warehouse, but they’ll go very shortly,” he said.
“We were really gearing up to sell quite a lot of high-end expensive wines into China so we’d been building up some stocks.
“There’s two containers on wharves over in China ready to be sent through, and there’s plenty of people talking about ordering too.”
Assistant Minister for Trade Tim Ayres said the effect of the repeals would be almost instantaneous.
“As of today, tariffs are being removed over the course of the day on Australian wine,” he said.
“There are existing exporters who have existing relationships, and we anticipate that they will be moving very fast to get wine onto supermarket shelves in China.
“For the 20,000 Australians who are employed in … our wine sector they can approach 2024 with much greater confidence than they have been able to approach the last few years.”
Bouncing back ‘a matter of years’
Among those in the grip of that greater confidence is Jared Stringer, who is CEO of Lane Vineyard in the Adelaide Hills, and who said that he was “absolutely rapt” with a decision that “couldn’t have come at a better time”.
“We had a downturn in sales, not only domestically but also across a number of our other export markets, where a lot of people who were sending wine to China had to pivot,” he said.
“There’s no doubt this will ease some of this pressure.”
The key word in that sentence, however, is “some” — because Mr Stringer said the current domestic glut of red wine, itself a consequence of the former trade barriers, was “certainly not going to ease in the short term”.
“There is a significant oversupply of red wine. It’s in the vicinity of potentially years before we start seeing a levelling out of that market,” he said.
Australian Grape and Wine CEO Lee McLean said while the reopening of the Chinese wine market would be “hugely positive” for grapegrowers, there were currently “hundreds of millions of litres of red wine in tanks and barrels of bottles right across the country”.
“At its peak, we were exporting about $1.2 billion worth of wine to China each year,” he said.
“Today, we’re exporting less than $10 million per annum to China, so it’s something in the order of a 99 per cent reduction.”
Redressing that reduction was, he said, “not a short-to-medium-term proposition” — partly because Chile and France had filled some of the void left by Australian wines.
“It’s going to take some time to get back into the market and rebuild those connections with consumers,” he said.
“This is going to take a matter of years, I would imagine, to be able to see that kind of level of opportunity again in China, but we have to start that work now.
“Even if we get to half of what it was, in a short period of time, that’s still a really significant export market for us.”
In the meantime, he said, diversification would be crucial.
“We don’t want to get into a situation where we’re solely focused on China. We know we need to be building our export markets and looking for growth wherever we can,” Mr McLean said.
The federal government also spoke in favour of such an approach.
“It’s never good to put all of your eggs in one basket in business,” Mr Ayres said.
“The message from the government to Australian wine growers, and to Australian industry more broadly, is diversification is absolutely critical.”
For Mr Osborn, another challenge will be to respond to changing consumption habits within China itself.
“China’s only drinking about half the amount of wine it was pre-COVID,” he said.
“The whole wine industry is rather nervous because we know that China’s only going to fix a little bit of our oversupply, so we can’t see exactly what’s going to happen.”
Despite that note of caution, Mr Osborn remains intent on a glass-half-full outlook.
“I’m optimistic,” he said.
“We’ll be getting back in the market instantly.”
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