Wineries warn China deal no ‘silver bullet’

By James Wells in Sydney

Australian and New Zealand wineries have warned that a Free Trade Agreement and the removal of tariffs for wine sold in China may not deliver immediate benefits.

Ferngrove Wines sales and marketing manager Andrew Blythe has told TheShout that while the agreement will provide benefits, there is still work to be done to improve Australia’s reputation as an exporter to China.

“The Free Trade Agreement comes as positive news to the industry, however I don’t think it will be an immediate ‘silver bullet’ for the Australian wine industry,” he said.

“It will put us on a more competitive playing field with countries like Chile and New Zealand [who also have Free Trade Agreements with China]. China is the third largest export market for Australian bottled wine, behind the United States and United Kingdom. If we are going to capitalise from this deal, the industry still needs to build on its presence and reputation of premium wines in China and avoid using it as a market to move, low quality excess inventories."

Blythe recently exhibited at the Hong Kong Wine & Spirits Exhibition earlier this month and has a strong understanding about the buying dynamics in the Chinese market. He joined other local exhibitors on the Wine Australia stand which helped make Australia the third largest country by number of exhibitors at the entire show.

“It was definitely worthwhile attending [the Hong Kong Wine & Spirits Exhibition] to attract new business and distributors from South East Asia (SEA). However if we are to increase our presence in SEA as a premium producer, we must continue the message of regionality which I felt lacked and became confusing on the Wine Australia stand.”

Steve Maguiness, the director of the New Zealand based winery, Ohau Wines is also cautious about the impact of the Free Trade Agreement.

“The FTA is a big plus albeit I haven’t really cracked a large volume importer as yet. Actually a lot of the Chinese companies I talked to were not aware New Zealand had one, as they are mainly dealing with Europe and Chile (red wine),” Maguiness told TheShout.

“Chile has gone gangbusters in recent times due to their FTA as it has been in place for a while – combined with the cheap pricing so it can match the 1 Euro/bottle stuff out of France/Spain.

“I think it will be good for Australia too, gets you back to a level playing fiel .but the problem is the Chinese will be lining up for your low end product – which has been an issue for your ‘branding’ in recent times – and I’m sure there will be plenty of Aussie suppliers ready and willing. It’s important that a balanced approach is struck. You need quality in the market as well as volume.”