Wine growers in Australia have had a hard time since 2020, thanks to punitive import tariffs imposed on the country by China. In that time, over two billion liters (5.2 million gallons) of cabernet sauvignon, shiraz, and other varieties have accumulated.
According to Financial Times, China is the world’s biggest buyer of Australian wines. The tariffs were apparently imposed in response to Covid-19 when the two countries were in disagreement. Fast forward to now, Canberra has a new government and is working to mend the relationship.
In promising moves, China has lifted sanctions placed on key Australian exports like coal and barley. Australia’s prime minister, Anthony Albanese, and China’s premier, Li Qiang, discussed the matter at the ASEAN Summit earlier this month. “It is in Australian wine producers’ interest to export wine, but it is also in China’s interest to receive it,” he said.
Despite the progress, many Australian winemakers believe that the wine trade has forever changed from how it was. Alister Purbrick, chief executive of family-owned Tahbilk winemaker in Nagambie, Australia said, “The market has effectively collapsed, which means there is a lot of bulk red wine floating around without a home.” Purbrick has been in the wine industry since 1976.
Wine is one of Australia's highest earning exports. Since the 1990s, the industry has tripled in size to around 1.3 billion liters (around 3.4 billion gallons) annually in 2022, with over 2,000 wineries throughout the country that employ 164,000 people. China is the largest market for Australian wine at $1.2 billion, doubling the UK and the US.
Local winemakers say that removing all of the tariffs would mean the world to the flailing industry. Nikki Palun, a Melbourne-based winemaker that used to export 200 containers of wine a year to China, was shocked when the industry was abruptly hit with tariffs. If that wasn’t enough, Covid-19 arrived and further complicated things.
With a new climate for wine consumption, Australia has some hurdles to overcome before the industry recovers. Much of their market share in China was taken by Chile, Argentina, South Africa, and Europe. Many winemakers now say that India is the next potential frontier. Whatever the future holds for Australia’s wine industry, depending on one market can always present future risks.