The latest report from the agribusiness institution RaboBank indicates it will still take years to get the market back to normal, even if China were to lift tariffs on Australian wine soon. The Report shows a downward trend emerging for the price of Australian wines. Rabobank forecasts that vineyards will be forced to close or sell during the next 5 years and it could also result in lower surface area for wines for Australia.

However, the Rabobank report says, even in a best case scenario, with tariffs removed this year and Chinese consumption of Australian wine recovering quickly, it would still mean the Australia’s wine industry still facing at least two years to clear their current wine surplus, according to Shout Out.

While this isn’t good news for Australian wine makers, there is an upside for consumers, says report author RaboResearch associate analyst Pia Piggott, with the oversupply making prices of many quality Australian red wines to fall.

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CEO of Australian Grape and Wine (AGW), Lee McLean who was earlier in India spearheading a marketing campaign-cum-technical seminar for the target audience feels lifting of tariffs would not be a quick fix. “The Rabobank report yesterday is not surprising. It sets out the challenges facing Australian grape growers and winemakers, and in particular those in regions such as Riverland, Murray Valley and the Riverina, who are experiencing such acute stress at the moment.

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“We are hopeful that we will see a re-opening of the China market in time, but we also recognize that the market will be different,” he said. “While a return to the China market would be a significant help, we are highly unlikely to return to the $1.2 billion in exports any time soon,” he said.

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Whereas McLean has been stressing increased exports to emerging markets like India and AGW has great plans to achieve this, Arora has been vocal in his views that the immediate chances of growth cannot be practical for the Indian market, at least for the next 10 years. To put things in proper perspective, India consumes around 36 million-to million bottles a year, all told. (At the current optimistic rate it would take India 78 years to consumer all their existing stocks, if we imported all we drink now from Australia).

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One hopes, nevertheless, that Indian importers would take the opportunity to negotiate and increase the imports, passing on the benefit to the Indian consumers. Of course, we wish Australia luck in reaching an Agreement with the Chinese government soon

Subhash Arora