IT’S unanimous, according to the Australian wine industry.
But where we go from here is anyone’s guess.
Because China’s decision late last month to suddenly end its crippling 200 per cent tariff on Australian wine is just the first step on a very long road to recovery.
A road which this harvest has seen many grape growers from Swan Hill downriver into South Australia not just not harvest some grapes – too many have either pulled their vines out or simply let the grapes fall and rot
On the day of the announcement, Murray Valley Winegrowers chief executive Paul Derrico said the news from China was cause for a major celebration.
It was an enthusiasm he tempered slightly when he reminded us that other wine-producing countries had not been slow at jumping into Australia’ grave, with countries such as France and South Africa zeroing in on the gap left by Australia’s virtual exclusion.
He said China’s announcement was “great news, so welcome for the industry”.
“Indeed it’s not just great news for grape growers and winemakers, it is equally great news for the country because the ripple effect here is significant for allied and support industries and many regional towns, not just in our patch but everywhere wine grapes are grown,” Mr Derrico said.
“It will certainly mean a lot to the local economy here in the Sunraysia and while there are challenges ahead this is a fantastic start and huge step in the right direction.
“Unfortunately, the announcement is too late to help the current vintage but let’s hope Australian wine can recover its share of the Chinese market and expand on that.”
Mr Derrico says damage to the local wine industry was coming long before China raised the stakes beyond reach.
He says COVID and then the global logistics chaos coming out of the pandemic, combined with China’s cooling economy, were already making severe inroads into our export markets.
“You really have to step back and look at the whole picture to see the real reasons it will went wrong,” he says.
“There are still many challenges, and China’s decision won’t fix them all, but it is a better place to be in than we were 12 months ago.”
Mr Derrico says he is also hopeful going forward that Australia will be able to rebuild a significant market share in China and expand, even though market share during the tariff showdown shrank from $1.2 billion to $10 million.
He says not being able to find a suitable alternative market has created a glut of bulk wine, in particular, and that has to be worked through because it will hang over the industry.
“There’s no overnight fix,” Mr Derrico says.
“A lot of hard work, time and money went into building the business in China and in many ways we are now starting again.
“I know the rest of the industry is ready, willing and able to seize the opportunity and, speaking to many of our growers, the news has been taken very positively.”
That said, Mr Derrico says his organisation had spent almost three years clearly and loudly spelling out the message that the market and the industry were facing unprecedented challenges and tough decisions sooner rather than later.
He says with very few exceptions it is the red wines that are being hardest hit, but across his region at least 50 per cent of grapes grown are whites.
He has also called for intervention in the face of a national red-wine glut which will not be absorbed by the domestic or export markets.
This might involve federal and state government cash and commitment – and will need a better management strategy than the chaos that came with the wool stockpile during the 1990s.
“MVW has been working with the national peak industry body, Australian Grape & Wine, in developing a pre-budget submission for 2024-25 and we are hopeful our federal government will support the mechanisms totalling $86 million to assist with the recovery and resilience of the industry,” Mr Derrico says.
“Despite the proactive approach of our grape growers – in the past 20 years grower numbers have reduced from 1300 to 300 in the Murray Valley – we are still faced with industry rationalisation, where production and wine sales profiles are still badly skewed.
“Our industry’s perfect storm has come off the back of the China tariffs, the record crush in vintage 2021 and the COVID-related problem I mentioned earlier and from which we are still recovering.
“Now harvest has ended up well ahead of where we have been in recent years, and while the growing season has presented its difficulties, wineries are already indicating vintage 2024 will be one of the more stable in terms of managing intake.”
As a pure wine grape grower, North West Farmer wine writer and Tresco West vineyards owner Colin Free says while everyone is relieved the levy has been removed, it was probably the reason one of Australia’s largest wine producers “chose to pick up their bat and ball and play more in other countries rather than support the local producers who enabled the company to reach the status it had achieved”.
Mr Free says while it’s great the levy has been removed, growers are realistic and know other countries now have products are on the shelves where ours once were.
“We don’t only have to regain that shelf space, China’s wine consumption has dropped as it has everywhere due to economic issues etc,” he says.
“The fact wineries have chosen not to take up the massive amount of fruit that’s still on vines this year shows they are nervous and are not prepared to take the risk on producing extra wine that they cannot sell.
“Some of the low prices offered for reds this year not only shows the lack of confidence in the industry but some of the prices are simply an insult to the producers who care so much for the industry to which they are devoted.
“In summary, I’m relieved the tariff has been removed and the industry can now gain some optimism, but we know it still needs to lose about a quarter of all wine grape planting to achieve a level of supply/demand balance.”
Mr Free says the wine grape harvesting of fruit to wineries in his region is finished for 2024 and he has the last 50 tonnes of his Lambrusco Maestri remaining – “which will be harvested to the ground soon so the harvester can be cleaned up and put to bed for another season”.
“It’s not the only fruit that we have put to ground but some have done a lot more and some less,” he says.
“We can only hope the most deserving and passionate growers can remain in the industry as we work through the solid oversupply situation.
“And regardless of whether your year has been good, bad or indifferent, please keep talking to your mates.
“It is so important.”
WHAT THE BIG PLAYERS SAID:
TRENTHAM ESTATE
TRENTHAM Estate co-owner and chief winemaker Anthony Murphy describes it as “a great day which has been a long time coming” and says although its full impact will take a little while to filter through, “much of the industry should rejoice”.
Mr Murphy says Trentham has received its first enquiries from Chinese buyers and he has already booked for some of them to be at his winery.
“Before the tariffs we were sending about eight containers a year to China but what I think the biggest thing about this announcement is the confidence it will give the industry to rebuild now and for the future,” he says.
“The ones who suffered most were the dedicated grape growers, whose prices have been unsustainable even though wineries have tried their best, but you can’t keep going if no-one is buying.”
DUXTON VINEYARDS
AT Buronga, Duxton Vineyards general manager Wayne Ellis says while the Chinese market has “been choked off” for the past three years, his business has a number of Chinese customers “waiting to go”.
Mr Ellis, whose company runs about 2500ha of vines, and counting, says they have been speaking with people in China for the past six months “so they must have known change was in the wind”.
“About 35 per cent of what we do is export so we would love the opportunity to get back into China and build a bigger slice of that market,” he says.
“Other countries have tried to take Australia’s place.
“The Chinese have tried Chilean and South African wine but they still prefer ours – we just need to have that small reality check that overall demand in China has gone backwards.”
AUSTRALIAN GRAPE & WINE
AGW chief executive Lee McLean says “this is a very important decision for the Australian wine industry”.
“It reflects the positive outcome of diplomatic efforts to stabilise relations with China and underscores the importance of collaboration between government and industry,” Mr McLean says.
“We are working closely with the Australian Government and Wine Australia to ensure a co-ordinated approach is taken to re-entry and that the sector is well positioned to re-establish trade relationships.
“We look forward to seeing Australian wines back on Chinese dining tables and rejuvenating our relationship with customers and business partners in that market.
“We will also, however, be maintaining our focus on diversifying our export footprint and growing demand here in Australia as well.”
WINE AUSTRALIA
WINE Australia welcomed the announcement by China’s Ministry of Commerce on March 28 that the anti-dumping duties on Australian wine to mainland China would be removed effective the following day.
Wine Australia CEO Dr Martin Cole says that before the imposition of the duties, mainland China was Australian wine’s most valuable export market and it is a market where opportunities remain for Australian wineries.
“Mainland China remains an important market for the Australian wine sector,” Ms Cole says.
“Over many years Australian wine companies have developed close relationships with importers, buyers and consumers of Australian wine in China and these relationships remain important to our wine community.
“Pleasingly, we know that trade and consumer sentiment for Australian wine in China remains positive.
“However, the wine market in mainland China is different now to what it was at the end of 2020.
“Wineries seeking information to re-enter the market are encouraged to review the export market guide and market insights and sign up for information about upcoming activities at wineaustralia.com.
“We will support the Australian wine sector to re-enter the market through a co-ordinated set of activities and advice on market requirements while continuing our market diversification efforts in other markets.”
RIVERLAND WINE
Riverland Wine has welcomed China’s decision to remove import duties on wine immediately, in the hope that it will re-open what was once Australia’s largest export market.
Riverland Wine chief executive Lyndall Rowe says the tariffs, formally introduced in March 2021, had particularly affected the region’s growers and producers, with many struggling to find buyers for significant volumes of red wine varieties.
“The export tariffs were catastrophic for our industry and restoring the Chinese market will make a significant difference for our growers and producers who have struggled to find buyers, battled to sell their grapes for a reasonable price and had to hold excess volumes of wine in tanks,” Ms Rowe said.
“This is a positive step forward for our Riverland growers and we are looking forward to rebuilding relationships with Chinese buyers and restoring the market over the coming months and, potentially, years.
“However, we are also conscious of the fact that this will take time and it won’t solve the challenges our Riverland growers face in the short term.
“Market diversification is essential, which is why we are working to build the reputation of the Riverland as a region in Europe and in other markets.”
