New episode: China-Australia wine tariff drama

When it comes to prospects for China lifting its up to 218 percent tariffs on Australian wine, you could say there is good news and bad news.

The good news: China’s Ministry of Commerce announced last week it has formally started a review of the tariffs, a precursor to eliminating them.

The bad news: those doing review the have until next November 30. For those producers eager to return to China, that could mean a long wait.

The worst news: in the three years since the tariffs were enacted, the China wine market has cratered, with consumption, production and imports hitting low and low. That likely means a harsh reality check for Australian producers attempting to rebuild market share that many felt they never should have lost in the first place. The situation is also complicated by a wine glut at home, some stocks still existing in China and general consumer wariness over spending.

In any case, my article on the tariff situation appeared on Wine-Searcher yesterday:

“Call it winderlust. Australian producers have wondered for three straight vintages when they might return in force to China, their top export market until late 2020 when heavy tariffs forced them out. There is new hope after Prime Minister Anthony Albanese met President Xi Jinping in Beijing last month and as China is planning a tariff review. But it comes in the wake of major costs for all involved and raises the issue of just how much of China’s market Australia might recapture.”

The article provides background on how the tariffs arose, the reasons Australia wine become so popular in the first place, how TWE / Penfolds reacted, and more. Here are a few quotes, with the full story at this link.

—

“With vast resources, TWE/Penfolds bunkered down, even making a ‘long-term, multi-faceted strategic co-operation agreement’ with CADA, the very organization that spearheaded the tariffs.

“For three years, TWE organized product launches, created made-in-China wines in Ningxia and Yunnan, imported its French and US labels, awarded scholarships to Chinese students, and more.”

—

“For local producers, hopes their brands would replace Australia’s in the lucrative entertaining segments also went largely unfulfilled.

“While China’s wine quality is rising, production is falling. The official figure for 2022 is 230m liters, a mere 20 percent of a decade ago, although earlier numbers are likely somewhat inflated. As in Australia, stocks are accumulating at many wineries.”

—

“‘Considering the weakness of the Chinese wine sales market, there is a long way for Australian wine to return to the top spot,’ says importer Robert Wang.

“Wang says a quick decision to drop tariffs would allow Australian brands to leverage the lucrative Chinese New Year sales campaign. Otherwise, he sees a much slower recovery.”

Check out the fully story here.

Sign up for the Grape Wall newsletter here. Follow Grape Wall on LinkedIn, Instagram, Facebook and Twitter. And see my sibling sites World Marselan Day, World Baijiu Day and Beijing Boyce. Grape Wall has no advertisers, so if you find the content useful, please help cover the costs via PayPal, WeChat or Alipay. Contact Grape Wall via grapewallofchina (at) gmail.com.