March 29 marked a pivotal moment for wine producers in Australia as China’s Ministry of Commerce announced the removal of punitive tariffs on Australian wine, concluding a three-year battle that had significantly impacted the industry.
Before the imposition of tariffs in 2020, mainland China stood as the most lucrative export market for Australian wine. Exports peaked at AU$1.3 billion in the 12 months leading up to October 2020, with a volume of 121 million liters.
However, the imposition of tariffs, reaching as high as 218.4%, in response to the Australian government’s inquiry into the origins of Covid-19, precipitated a downturn in Australia’s wine trade. By 2023, wine exports to China had dwindled to AU$10.1 million, marking a staggering decline of nearly AU$1.29 billion in value. Volume plummeted by 119.6 million liters to 1.4 million, with the number of exporters to the market shrinking from 2,198 to 117, according to Wine Australia.
The announcement of the removal of tariffs in March was met with relief by Australian producers. Dr. Martin Cole, CEO of Wine Australia, emphasized the importance of rebuilding relationships with importers, buyers, and consumers in mainland China, noting the continued positive sentiment towards Australian wine in the market.
However, reentering the Chinese market poses challenges for Australian producers. Rob Temple, managing director of Sinowine, highlighted the need to rebuild trust among distributors and consumers. This involves a multi-level process where brands must opt for reentry, distributors must commit to taking them on, and consumers must be reintroduced to Australian wines.
While Australian producers face a different landscape upon their return, there is optimism for the future. Makoto Nagae, CEO of distributor ASC Fine Wines, expressed readiness to rebuild the Australian wine portfolio and forge new partnerships.
Under the China-Australia Free Trade Agreement, Australian wine will benefit from a 0% import tariff, giving it a competitive edge over other foreign suppliers facing a 14% generic tariff.
Leading brands like Penfolds are already making strides back into the market. Treasury Wine Estates, owner of Penfolds, plans to expand its premium and luxury Australian wine distribution in China, alongside increased investment in sales and marketing.
Despite the challenges ahead, Australian producers are poised to reclaim their position in the Chinese wine market, buoyed by the strength of the Australian brand and the prospect of renewed growth.
