With china hitting Australian wine growers with duties of up to 218% and detaining tens of thousands of litres of wine at their ports, this is hitting wineries in Australia incredibly hard.
The value of exports of wine to China dropped to almost zero in December, according to statistics from industry group Wine Australia. The total value of wine exported to China for all of 2020 dropped by 14% to about 1 billion Australian dollars ($790 million).
China maintains the measures are needed to stop cheap wine imports from depressing the local market. But the Australian wine industry believes it has more to do with worsening tensions between the two countries.
Australia is the world’s fifth-largest wine exporter and home to some of the world’s most-famous wine regions, such as the Barossa Valley in South Australia and the Hunter Valley in New South Wales.
The two countries signed a free trade agreement in 2015, removing the 14% tariffs on Australian-produced wines.
The removal of tariffs supercharged a growing industry. Between 2008 and 2018, Australia’s wine exports to China jumped from $73 million to over $1 billion.
As some Australian winemakers look overseas for new markets, there are quiet concerns that if the China market goes for good, there simply isn’t anything that can replace it in terms of buying power.
Could this see Australian wines come at more of a premium in future? Or might we see an increase in value for investors of past vintages coming out of the country?
Time will tell, but all we can hope is that an agreement can be come to between the two countries.