By James Wells
The announcement of a Free Trade Agreement with China has been met with widespread enthusiasm by winemakers as tariffs are set to fall to zero within four years.
The Chinese export market for Australian wine currently represents approximately 37 million litres valued at $210 million and predictions are that this will increase dramatically once the 14 per cent tariff on bottled wine and a 20 per cent tariff on bulk wine is removed.
With the removal of the tariffs, Australia will join New Zealand and Chile who have already benefited from their own Free Trade Agreements with China.
Winemaker Philip Shaw told TheShout he believes the removal of tariffs will help his existing export business to China, which he supported recently by attending at the Hong Kong Wine & Spirits Exhibition earlier this month.
“The value to us of the Free Trade Agreement should be a considerable boost to our industry. It gives an advantage to the Australian wine industry at a time when wine sales have slowed due to the Chinese Government control on gifts. The agreement should be beneficial to us as we have good sales in China which we believe will grow,” Shaw said.
“This will put Australian wines in a more competitive position, especially cost-wise,” said Chinese-born and Australian-based winery owner Helen Xu from Helen & Joey Estates who has recently returned from exhibiting at the ProWine China exhibition in Shanghai.
“Australian wine has a reputation as good wine, and like all of the farmed product that is exported to China [it is regarded as] natural, healthy, powerful and elegant. Often in the past we were defeated by wines from countries such as New Zealand and we are now more confident with our journey into China.”
According to the Australian Grape and Wine Authority (AGWA), the Chinese wine market represents 5.4 per cent of Australian wine exports valued at 11.8 per cent and growth in the last five years has been 8 per cent for volume and 17 per cent for value.
China is Australia’s largest export market by value for wine at a wholesale price point of more than A$7.50 and the third largest export market overall by value behind the United States and the United Kingdom.
“China continues to hold enormous potential for Australian wine exports and after the recent contraction of the Chinese wine market and the impact of their government austerity measures, particularly on wine at higher price points, this is a very positive result for Australian wine,” said AGWA acting CEO Andreas Clark.
“The wine culture in China is still developing but more and more Chinese consumers are starting to discover and appreciate wine. This FTA means it will be that much easier for us to ensure that as these consumers learn more about wine, it’s Australian wine they’re drinking.”
AGWA’s marketing arm Wine Australia, has a dedicated office in Shanghai and executes an annual calendar of marketing activity in some of China’s largest cities and provinces. Wine Australia recently announced the winners of its second annual Wine Australia China Awards which recognises the efforts of those who have helped promote Australian wine in the Chinese market.