Wineries in some of Australia’s key wine regions are facing a difficult future as China’s wine tariffs are likely to bring smaller wineries out of business, forcing larger producers into new markets.
The following is news over the weekend that China has imposed crippling import taxes ranging from 107 percent to over 200 percent on every Australian wine.
Australia’s largest wine company, Treasury Wine Estates, said its imports to China fell by a massive 169. 3 percent tariff, and immediate measures are implemented to minimize the damage.
Mitchell Taylor, the executive director of Taylor’s Wines, an award-winning vineyard in South Australia’s Clare Valley, said the industry is ready for a shock but the sheer size of the tariff is unprecedented.
« As an industry, we knew something was coming, but making it come so quickly and so hard was a really big surprise and a pretty outrageous decision, » said Mitchell.
« Our wines, which typically sell for $ 25 a bottle, will triple instantly.
« In the meantime, our competitors – winemakers in France, Chile and New Zealand – don’t have to pay this tax.
« The sector is under a lot of stress. There will be many small wineries who find it financially unsustainable under the pressure. «
Ross Hill Wines, based in Orange, New South Wales, has been exporting nearly 20 percent of its wine to China for a decade.
« We have great customers and we love dealing with them after spending a lot of time and money on the relationship, » said owner James Robson.
« These tariffs are terrible news, they will triple the cost of selling our wine in China.
Australia’s largest wine region, the Riverland, produces more than a quarter of the national rush and is home to more than 950 wine growers.
Riverland Wine Chairman Chris Byrne said without question, « The industry is really going to be hit by tariffs » and that would create significant supply and demand problems.
As trade and political tensions ease, speculation is stirring up about what is really going on between the two nations – and what is next on a Chinese « hit list » for sanctions. .
« Given that around 20 percent of our volume goes to China and about 40 percent of our revenue comes from wine, this will undoubtedly put some serious pressure on the downside, » Byrne said.
« It will put pressure on wine prices and that will translate into pressure on grape prices.
« I think we can still be reasonably confident that Chardonnay prices will hold up, but there is a general view that there will be significant downward pressure on red prices.
« I think overall we have an advantage over those who are far more exposed to China than inland, but neither of us have a crystal ball, so it’s very difficult to predict what will happen. «
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AEST = Australian Eastern Standard Time, 10 hours before GMT (Greenwich Mean Time)
Treasury Wine Estates, China, Penfolds
World News – AU – Australian wine producers face a bleak future with China’s tariffs
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