Red wine prices tipped to plummet as exports to China trickle to a halt
The price of red wine is set to plummet as the effects of trade tariffs take hold, with new data from China showing Australian wine imports into the country were down by about 75 per cent since trade tensions began.
Tariffs ranging from 107 per cent to more than 200 per cent were introduced late last year after China accused Australia of selling wine at below the cost of production, a suggestion winemakers reject.
The impact was partially captured in Wine Australiaās annual report which showed the value of exports to China falling to $1.15 billion in 2020 ā still more than double the second-placed United Kingdom ($456 million).
But with China largely out of the picture, winemakers are being encouraged to return to traditional markets including the UK, United States, Canada and Germany.
āWeāve got to try to re-attack those markets,ā Ciatti Australia director and grape broker Matthew Tydeman said.
āBut we now have to realise that weāre competing against Chile and Spain and Argentina for the price points, and those price points are a lot cheaper than what weāre seeing in Australia at the moment.ā
As a result, he said, producers will start to see a falling wine price and a falling grape price in Australia.
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āReds are going to be long and we will see the price soften, and we are already hearing prices are down from last year,ā Tydeman said.
āThere seems to be a good demand for white grapes at the moment ā chardonnay, sauvignon blanc and pinot gris have been in good demand, and if anything they are short.
āI expect the whites to stay constant, but if we get a big harvest, the price could easily fall down.ā
Grampians Estate owner Tom Guthrie said growers and winemakers remained on edge about the drop in Chinese trade.
āWe export small volumes of wine to China, most wineries do, but the larger wineries have a bigger share,ā he said.
āLong-term itāll have an effect on our bottom line and other markets arenāt easily found, particularly for small wineries.
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āFor us we just donāt look to China now, full stop.
āI feel sorry for the middle players too; we deal with a young Chinese exporter in Melbourne and their business has come under pressure as well, not just ours.
āAll these people along the pipeline are affected by whatās just politics really.ā
An investigation China is conducting into the anti-dumping allegations is due to finish by the middle of the year, but winemakers say they do not think much will change.
āBottled wine has essentially gone to a close; thereās still some bulk wine going in, but itās very little,ā Australian Grape and Wine chief executive Tony Battaglene said.
āThe bulk wine is important ā¦ itās a good little earner, but itās not going to replace the bottled wine, that premium product.ā
People in the wine sector do not hold much hope the tariffs will be reduced or removed anytime soon.
āLook, Iām not optimistic about this,ā he said.
āI donāt see any signs of the relationship improving, and from my discussions with the Department of Foreign Affairs and Trade, theyāre not seeing any easing of tension either.ā
ā ABC / Nikolai Beilharz
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