China’s tariffs are squeezing the life out of the Australian wine

One year on, and China’s tariffs on Australian wine imports have wiped almost a billion dollars from the trade, with the industry bracing for more pain heading into the 2022 vintage. 

This time last year, The Lane Wine Company in the Adelaide Hills was exporting more than 20,000 bottles of wine a year to China.

Now it doesn’t export anything there. 

Chief executive Jared Stringer said anti-dumping duties had gradually squeezed the life out of Australia’s wine exports to China.

“All of that wine going to China had to end up somewhere, and my biggest concern was and still is that it would end up in the domestic market and thus flooding it and lowering the price,” Mr Stringer said. 

At its peak, the Chinese wine trade was worth $1.26 billion a year to Australia and made up 41 per cent of the overall value of Australian wine exports globally.

In the last 12 months the trade has fallen off a cliff and is now worth just $82 million thanks to duties of between 116.2 per cent and 218.4 per cent.

The premium red wines have felt the brunt of the tariffs as 96 per cent of the export to China were red wine. 

Market diversification

The domestic market has picked up some of the homeless wine, but market diversification has been the main strategy to turn the fortunes around.

The federal government has provided a $50 million support package for exports and regional wine, but the pandemic as well as tight container availability and a global shipping crisis has made developing new markets difficult. 

Mr Stringer said the pandemic had supercharged sales from the direct-to-consumer market, helping reduce the shortfall.

 “We’ve had a more than 60 per cent increase in direct-to-consumer, which is enormous for us,” he said. 

The United Kingdom has emerged as the largest market by volume and value for Australian wine and one The Lane has targeted. 

Mr Stringer said they have seen some good gains in the UK, but it is a very different market. 

“So, we’re having to educate the UK consumers a little bit more that they can buy some premium Australian wines. But if you think about some of the discounted wine they’ve been buying through their big supermarkets, it is a bit of a re-education process.

“There are multiple markets, but it’s tough though with COVID because you can’t get overseas and you can’t shake hands and introduce yourself and get them tasting your…