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Red wine prices tipped to plummet as exports to China trickle to a halt

1 month ago
in Economy
5 min read
Red wine prices tipped to plummet as exports to China trickle to a halt
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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 there down by about 75 per cent since trade tensions began.

Key points:

  • Winemakers are being encouraged to return to traditional markets including the UK, US and Germany
  • Market analysts predict producers will start to see a falling wine and grape price
  • People in the sector don’t hold much hope tariffs will be reduced anytime soon

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 Australia’s annual report that showed the value of exports to China falling to $1.15 billion in 2020 — 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.

“We’ve got to try to re-attack those markets,” Ciatti Australia director and grape broker Matthew Tydeman said.

“But we now have to realise that we’re competing against Chile and Spain and Argentina for the price points, and those price points are a lot cheaper than what we’re seeing in Australia at the moment.”

Australia’s place in the global order is shifting

A composite image of Xi Jinping and Scott Morrison against red backdrops

Scott Morrison has sent a message to China that Australia will not be America’s “deputy sheriff” and Canberra won’t be making decisions based on a choice between Washington and Beijing, writes Stan Grant.

Read more

As a result, he said, producers will start to see a falling wine price and a falling grape price in Australia.

“Reds are going to be long and we will see the price soften, and we are already hearing prices are down from last year,” Mr Tydeman said.

“There seems to be a good demand for white grapes at the moment — chardonnay, sauvignon blanc and pinot gris have been in good demand, and if anything they are short.

“I expect the whites to stay constant, but if we get a big harvest, the price could easily fall down.”

The tariffs came in late last year and aren’t fully reflected in Wine Australia’s 2020 export report.(Supplied: Wine Australia)

Winemakers on edge

Grampians Estate owner Tom Guthrie said growers and winemakers remained on edge about the drop in Chinese trade.

“We export small volumes of wine to China, most wineries do, but the larger wineries have a bigger share,” he said.

“Long-term it’ll have an effect on our bottom line and other markets aren’t easily found, particularly for small wineries.

“For us we just don’t look to China now, full stop.

“I 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.

“All these people along the pipeline are affected by what’s just politics really.”

Have we hit peak China?

A windmill in the outback in front of clouds lit up red and orange by a sunset.

As trade and political tensions…



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Tags: ChinaExportshaltplummetpoliticspricesredtariffstensiontippedTradetricklewine
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