Aussie winemakers uncork new markets as Chinese tariffs force fresh pivot

Australia shipped a greater volume of wine worldwide last year despite China's imposition of prohibitive tariffs in November, with the latest data showing a sharp pivot to new destinations where our local drop has found favour.

Trade Minister Dan Tehan confirms the sector exported $2.9 billion worth of wine in 2020. This represents less than a 1 per cent decline despite challenge trade conditions.

In volume terms, UN Comtrade data shows Australia exported 761.8 million litres of wine last year, representing a 1.6 per cent rise.

As Australia launches a dispute resolution process with the World Trade Organisation (WTO) over China's tariffs of up to 218.4 per cent - a move China claims is in response to alleged dumping - Tehan notes wine sales to non-traditional markets rose in the March quarter.

"Sales to the Netherlands were up 63 per cent to $20 million and sales to South Korea were up 133.6 per cent to $13.6 million," Minister Tehan says.

The Netherlands and South Korea were Australia's 8th and 15th largest overseas wine markets respectively last year, representing a small fraction of the total compared to mainland China which accounted for a third.

Our second and third-largest markets - the US and the UK - were worth close to a third of Australia's wine exports combined, followed by Hong Kong, New Zealand and Singapore.

"Australia's world-leading winemakers are adapting to challenging trading conditions and it's positive that our winemakers are diversifying their customer base," Tehan says.

"Our Government's $72 million Agri-Business Expansion Initiative is supporting winemakers to expand their international markets, access market intelligence and matched grants for government and industry associations to work together on market expansion.

"While tariffs on Australian wine exports into the United Kingdom will be eliminated immediately under the Free Trade Agreement making Australian wines more attractive and competitive."

As one of Australia's oldest winemaking families, Brown Brothers from the wine-production region of King Valley in Victoria lost one of its biggest markets when China imposed hefty tariffs late last year.

"We were disheartened and frustrated," says Brown Family Wine Group CEO Dean Carroll.

"We'd worked so hard and it was taken away for reasons outside of our control. But you just have to get on with it. The world's a big place and we had to find the next opportunity and reset our export business.

Brown Brothers quickly shifted its attention to the US, where it has been exporting since 2016. The winemaker had wanted to launch its Tasmanian wines into the market for a while but supply was restricted.

However, with the change in export market conditions the group opted to shift supply previously destined for China to North America instead.

"The first shipments of our Devil's Corner and Tamar Ridge wines arrived at the start of 2021. We're already looking at new opportunities for the Brown Brothers brand," Carroll says. 

"Our exports have stood up really well in Singapore, Korea and the US.

"We are where we thought we would be, pre-tariffs, which is excellent."

Vietnam is another market that Brown Brothers is cultivating. The country only imported US$2.66 million ($3.55 million) worth of Australian wine last year, making it Australia's 26th largest market, but winemakers are optimistic about its potential due to a lowering of taxes and excises on alcohol, as well as a good understanding of wine due to its French colonial history.

"Vietnam attracts a lot of tourists that understand wine on top of its local base so it will become a strong market in the future," Carroll says.

"Like Korea, we believe younger consumers will drive the wine market in Vietnam and we will be actively targeting them."

The winery attributes part of its success to the efforts of Austrade, which has responded to trade disruptions by rapidly scaling up its services to support Australian agri-exporters via the Agribusiness Expansion Initiative.

"Austrade can access information that a business cannot, or would find difficult to access. They've introduced us to distributors, helped coordinate government bodies and shared knowledge that has helped us navigate the challenges of overseas markets," Carroll says.

"This is why Austrade is a valuable resource. It can be costly, time-consuming and challenging to build your brand in areas you haven't been before. To have an agency tell your story, do the research and create connections is a fantastic benefit.

Austrade was quick to offer assistance when Brown Brothers indicated it wanted to build its presence in Vietnam. The agency provided market information and, in partnership with Wine Australia, offered opportunities to meet with new buyers.

"Austrade's assistance has been very helpful as finding market data and distributors is challenging because the market is still quite immature," Carroll says.

The Brown Brothers executive encourages wine exporters to find a distributor in their target country who is willing help them understand the market, while they establish their business.

"We have wines that are important to us and we'll try to lead with those, but we'll listen to advice from our distributor," he explains.

"If they say there is a more receptive market for pinot grigio than a moscato, we'll take that on board because they understand the market better than us."

Brown Brothers will continue committing resources to underdeveloped parts of its business, such as Japan. It has worked with the same Japanese distributor for more than 10 years and is ready to increase its exposure and expand its partnerships.

The group is also making the most of virtual events organised by Austrade to meet potential buyers, as has Moorilla Winery in Tasmania which participated in a virtual wine tasting event organised by Austrade's office in Taipei along with five other wineries.

Moorilla chief winemaker Conor Van Der Reest says the winery sent its first shipment to Taiwan in February, with another shipment in the order stage and another party seeking samples.

"The Taiwan event has been very good for us. We have sent our first order, another one is in the order stage and another party seeking samples," Mr Van Der Reest says.

"We would like to thank Austrade for all for your help and support. It's been a fantastic reception for our brands and I think Tasmania in general."