DAN'S WINE BLOG- ANOTHER CHINA UPDATE

Friday, December 9, 2022

?Recently at the G20 meeting in Indonesia, the Chinese Government approached and spoke to the Australian Government for the first time in more than two years. They said that they wanted to meet us halfway and improve the trading relationship between the two countries.

?N*E*W*S**F*L*A*S*H: They were the ones who unilaterally imposed a 212% import tariff on our wines – so how can we meet them halfway? How about they rescind this iniquitous tax and then we can talk – or do they mean by meeting halfway that we should impose a 106% tariff on all Chinese imports to Australia, e.g. cars, electrical goods, etc?

?Anyhow, even if they did remove the complete tariff (in your dreams) it would not solve Australia’s wine oversupply because wine sales in China are in decline, almost dare I say it, collapsing.

?As I have reported several times, after nearly two decades of unparalleled growth, wine imports to China started to slow in 2019, and due to the strict pandemic rules in China and discouragement from the Government including the president, wine consumption has been in decline. While encouraging local production Xi Jinping is trying to steer the population away from wine, especially imported wine, towards the local rice wine, Moutai.

?Thus month after month we have seen a drop in China’s wine imports. While at the same time, China’s wine production today is less than half of what it was in 2014 i.e. a double whammy!!

?To add to this, recently the reliable journal Vino Joy News, reported that this year’s Chengdu Wine & Spirit’s Fair was a flop, with very disappointing attendance numbers and the organisers are facing a ￥5million law suit. At the same time ProWine Shanghai 2022 has been indefinitely postponed.

?Meanwhile, Vinex reports that some Australian wines are still readily available in Tier 1 and 2 cities – Can you imagine how much of a stockpile there must have been in China of Aussie wines for this to be the case nearly two years after the tariff was imposed?

?So even if by some miracle our Government could get the Chinese Government to rescind their unjust tariff, it will not be a return to “business as usual” for a number of reasons – the ones I have outlined above, plus the fact that other countries have been peddling like crazy to replace us since the tariff started. So while we would regain some volume it would be much smaller than what it was before.

?Oh, and by the way, IF anybody tells you that India will replace China as a major market for Australian wines in the foreseeable future, tell them that: “they are dreaming!” Between the 150% import duty, the state taxes (in those states which allow the sale of alcohol and the prevailing spirits culture in the government) and despite the FTA (Free Trade Agreement), sales to India will barely rise over the next few years.

?Sorry about all the doom and gloom but we need to be realists! You should go looking for and exploring other Asian markets and other European countries.

?Cheers and make sure you drink as much Aussie wine as you legally can!!! The producers need our best efforts at present in order to survive.