While the Australians might be celebrating the revival of the billion-dollar wine trade, the industry insiders believe the business will not expand back to the pre-covid levels and the current problem of glut may continue  for the next 2-3 years at least.

The Ministry of Commerce in Beijing  announced  this decision on Thursday, 4 days before the expected date of announcement, ahead of Good Friday.  It was eagerly awaited by the industry for weeks following indications from Australian vintners and  government  that China might lift the import taxes soon.

 In a statement, the commerce ministry cited changes in the wine market conditions in China as the reason behind the decision to no longer impose anti-dumping and countervailing duties on Australian wine imports. The wine consumption in China had taken a big dip around the Covid time and has still not recovered.

This move to remove trade restrictions has raised expectations of reviving the profitable wine trade between the two nations. However, the national president of the Australia China Business Council cautioned that winemakers might not fully return to the market immediately.

David Olsson expressed to Bloomberg Television that while a significant portion of the wine is expected to re-enter China, some producers had started looking at the alternative markets during this period. Once bitten twice shy seems to be the refrain. Thay are expected to continue exploring alternative markets due to the changed landscape.  

The imposition of tariffs by China on Australian wine, reaching as high as 218% in March 2021, came in response to then-Prime Minister Scott Morrison’s call for an international investigation into the origins of Covid-19. This decision exacerbated an oversupply issue, crippling the Australian wine industry.

In 2019, China was Australia’s primary destination for wine exports, amounting to A$1.1 billion. With an estimated wine surplus lasting at least two years, Australia found itself with an excess of 2.8 billion bottles in storage, equivalent to 859 Olympic-sized swimming pools, according to a Report by Rabobank in August last year.

Relations between the two countries began to mend following the election of Prime Minister Anthony Albanese’s government in May 2022, culminating in Albanese’s visit to Beijing in November of the same year. Some trade restrictions on other Australian commodities had already been lifted, with China now accounting for about 90% of Australia’s barley exports after tariffs were abolished in August.

This action of China is not expected to affect the import of Australian wines to India as their efforts to penetrate will continue, thanks to the one-year old FTA between the two countries, that reduced duties on premium wines progressively during the next 10 years. That market is expected to continue growing though at a slower pace than wished by the Aussies. In fact, bitten by the arbitrary and sudden decision of China to impose the punitive duties, the Australian producers are expected to continue their efforts of expanding in the newer markets globally.

Subhash Arora