China wine tariff review ‘no silver bullet’, but Australian producers hold hope for the future

Australian winemakers and growers say they are optimistic but cautious that tariffs on local wine exported to China will soon be dropped. 

China announced on Sunday it would start a five-month review into the tariffs on Australian wine and whether they should be lifted. 

In return, Australia has agreed to suspend action against China in the World Trade Organization. 

The tariffs of up to 200 per cent on wine imported from Australia were first imposed in November 2020, at a time when exports to China were worth more than $1 billion each year. 

South Australia is the nation’s highest wine-producing state, and its Wine Industry Association president, Kirsty Balnaves, said the news was a welcome first step.  

“We went from exporting around $1.3 billion worth of wine into China to now just over $10 million,” she said. 

“So that gives you some enormity about how much these tariffs have impacted not only our industry but also regional communities. 

“I think five months is fine. We’ve been out of the market for three years, so if we can get the right result in five months I think that’s a really positive thing.” 

Growers hurting after tariffs  

Riverland bulk grape growers have been hit by record-low prices for fruit ever since the tariffs helped contribute to an oversupply of red wine in storage. 

CCW Co-Operative represents growers who sell their grapes to multinational wine producer Accolade Wines

Its president, Andrew Kassebaum, said his business had lost 80 per cent of its revenue since the tariffs were introduced, but the review gave some optimism. 

“We’d been hearing whispers through our different channels, but it still needs to be tempered with some ‘it may not happen’,” he said. 

“There’s going to be causalities going forward. The majority of the growers who are still in the industry are using equity at this point in time, selling any assets to provide some cash flow for their business.

“It has been tough for the past two or three years.” 

At Hanging Rock Winery in central Victoria, Ruth Ellis exported 50 per cent of her wine to China before tariffs crippled her sales.

Ms Ellis said the five-month review would coincide with the crucial harvest time for producers.

“If they’re looking at lifting restrictions in March and April, many wineries are going to have to hedge their bets as to whether or not tariffs will be lifted,” she said.

“The biggest hit in this whole thing has been for the grape growers. Bottled wine can last between five to 100 years, but once grapes are ripe, they have only weeks.

“There’s a lot of really full wineries that are still at capacity, so it will be challenging to see what this is going to mean for them and whether their grapes will be taken or not.”

Return to China no ‘silver bullet’ 

In the largest wine production region in New South Wales, the president of the Riverina Winemakers Association, Andrew Calabria, is cautiously optimistic about re-entry to the Chinese market.

“Things have changed during that COVID period. The economy isn’t doing as well in China either, and not as many people have that cash,” he said.

“We’re going to welcome any change to the tariffs but also are very cautious that consumption is probably lower for wine, and it’s not necessarily going to be that $1.2 billion worth of value that we had before.”

Mr Calabria is also concerned competitors from South Africa, France, Italy, and South America have grown market share in Australia’s absence and expects wineries will take a measured approach if the market does open up.

“It was an important market, it was taken away quite abruptly, and it definitely hurt,” he said.