URSABLOG: Wine Flows

For any of you that know me well, or at all in fact, you will know that I am a wine lover. This is not a love affair, or an ongoing flirtation, but a full-bodied commitment to the fruits of the vine. It started many years ago, and despite what people may think of this Englishman that doesn’t really like beer – I like a glass or two, but I can’t stand around all day with a pint in my hand like many of my compatriots – a day rarely passes without a glass being filled with some wine or other.

It’s is such a harmless drink, when taken in moderation, or even in moderately large amounts, that it seems unlikely to be drawn into any trouble. Spirits and beer have negative connotations depending who is doing the drinking, but the only bad image for wine drinkers I can come up with is the wino on the street, which is a bit sad rather than threatening. Wine is at the centre of many cultural celebrations, and religious services, and is seen as something that is almost food itself. It is best drunk with food, and an obsession with it can drain the bank balance rather easier than say that of a beer connoisseur. So it is with some sadness that I see that wine is being dragged into the worsening diplomatic tiff between Australia and China.

Let me say at the outset that I have no especial fondness for Australian wine. I started learning about wine seriously almost thirty years ago, attending wine appreciation classes run by the local adult education body in Liverpool. Now many of you may chuckle at this: wine appreciation in Liverpool? Beer and tea maybe but wine? But that education, theoretical and practical – or reading and drinking to you – laid the foundations to my passion. Other people ‘down south’ found it amusing too: a TV production company was tempted northwards from London to find out what these scousers were up to. I am still on a video tape somewhere, hosting a wine tasting, looking like the would be petit bourgeoisie that we undoubtedly were.

It was in these classes that I realised that I preferred European, and particularly French wines, to what were called the ‘New World” wines of Australia, New Zealand, South Africa and so on. It was mainly about style: the ‘New World’ wines were tasty certainly, but they were heavy with alcohol, and had their distinctive dominant flavours of fruit (gooseberry, redcurrant) or other flavours (butter, chocolate, vanilla) that were easy enough to isolate and drink, but lacked the more complex flavours, for good or bad, of the Europeans. Pound for pound they were better value, up to a point, and then they weren’t. The debate between the two factions got quite heated - ‘French muck’ v ‘Australian fruit juice’ – especially after a few drinks.

My tastes have developed as I have matured, and I am more broadminded, but I still prefer wines that give an evocation of a place and time rather than ones that go down the throat without leaving a memory. It is good to report however that in the intervening years, New World wines have matured too. I can count on a Chilean merlot, or an Argentinian malbec wherever I go, and have been known to dig deep for Oregon and Washington State pinot noirs. And now Greece is reinventing it’s own wines, especially with xinomavro and dry mavrodaphni, the world is a better place.

My own experience of drinking wine in China is limited: a couple of glasses in hotels or wine bars, usually Australian, and every once in a while flattered with a glass of very high end Bordeaux at a shipyard or delivery ceremony, only for the delicate and cultured palate and nose to be blasted away by Sichuan food or baiju toasts. It was not uncommon to have four glasses kept full next to you: wine, whisky, cola and baiju. You took your chances.

Things have moved on since then. China is the biggest overseas market for Australian wine, with annual exports of around US$ 890 mill. But Australia is not in China’s good books at the moment, so this industry has been hit with up 212% worth of tariffs, which is enough to make the most dedicated wine drinker’s eyes water. Add to this coal, beef and barley, and the list of China’s imports from Australia which are not subject to trade restrictions or obstacles is thin. Iron ore, for now, remains unaffected.

Despite its benign appearance however, wine has always been vulnerable to trade disputes, possibly because of its very visibility. During the Napoleonic wars, French wine was banned in the UK, but it was still smuggled in by romantic characters still celebrated along the south western coasts of England, with pubs and landmarks named after them. (It is hard to see pubs in the future named after the drug or people traffickers of today, but the principle remains the same). In these more globalised times, President Trump slapped tariffs on Champagne and other high end wines, ostensibly for dumping – the same crime Australia is accused of – but I can’t imagine much dumping of champagne going on in the bars and clubs that superstar rappers, models – and businessmen -frequent. Even in Greece it is hard to see a bottle of champagne being served in a nightclub without a firework attached to it.

But what are the chances of Chinese citizens smuggling their favourite Australian wine in against the authorities wishes? Very little. Apart from the surveillance culture in China, there are far too many substitutes available for Chinese drinkers to get their tannin fix. And this perhaps is the key to what is going on between China and Australia at the moment. China is being very rude – extremely rude – to Australia in diplomatic terms, mostly because Australia called for a full investigation into the source and causes of the COVID-19 virus, which China saw as unacceptable meddling in internal affairs. And so beef and barley and coal – and now wine – has to find other markets. Support for wine is easier to mobilise – and advertise – than coal however. Just go out and buy a bottle.

But it is in coal that the end game perhaps can be seen. Fifty bulk carriers have been anchored off the Chinese coast waiting to discharge coal, some for many months; their cargoes have not been unloaded due to Chinese concerns of ‘environmental concerns’. One assumes these concerns are not about greenhouse gas emissions in general - China burns enough coal from Indonesia and elsewhere – but about the twin goals of punishing Australia and supporting their own coal industry. But as coal prices, particularly coking coal, have started to increase – due to domestic mine closures and a COVID-19 outbreak in Mongolia - and as the cold weather comes, some of these ships are starting to discharge. At least the ships are there and ready, if they need more they can get it from Russia, Indonesia and, as a last resort perhaps, back to Australia. The same is not true of iron ore; there is no sign of China restricting Australian imports due to ‘environmental’ or any other concerns, especially as the only alternative – Brazil – is having difficulty in increasing their production.

The overall effect of this trade diplomacy, will be to distort and bend trade routes, but not break them. Increased tonne-mile demand is not a bad thing for shipping, even if it is only the mile side of the equation that is growing. But Australian wine is facing a challenge now, and whilst it may try and promote its product to other allies, there may come a time when China will allow Australian to be imported with less punitive duty levied on it. A really effective Australian retaliation would be to ban iron ore exports to China: that would certainly bring them to the negotiating table. But iron ore is Australia’s biggest export – US$ 45 billion in 2017 – and with China by far the biggest customer, that is not going to happen any time soon.

So as I head home after another week in the office, dealing with the trials and tribulations of life in shipping, I look forward to taking out a good bottle of wine – I haven’t decided whether it will be Greek or French – and relaxing in the knowledge that at least my supply is secure. Whether or not I will be opening an Australian wine any time soon will probably depend on a mixture of a change in taste, an increase in sympathy for the Australians, and how trade flows change in this increasingly fractured, confrontational and political world. 

Simon Ward

www.ursashipbrokers.gr