China's wine market ready to welcome likely return of Aussie wine as ties improve

By Casey Hall and Xiaoyu Yin

News that punitive tariffs on Australian wine introduced by China in 2021 would be reviewed as part of a push to improve the relationship between the two countries was cheered by many, including Campbell Thompson.

The Beijing-based Australian CEO of wine importer and distributor The Wine Republic has spent more than a decade making his living from bringing wine, much of it from Australia, into the China market.

"We are looking forward to the tariffs being removed. I think for Australia there is definitely an opportunity," he said.

Late last month, as ties between Beijing and Canberra improved, the two sides announced they had reached a consensus to settle a World Trade Organisation dispute about wine and that anti-dumping tariffs, which weren't set to expire until 2026, would be reviewed.

Australian Prime Minister Anthony Albanese kicks off a visit to China on Saturday, the first visit by a sitting Australian leader since 2016 as the trading partners continue to work on stabilising ties.

The introduction of a 218% tax on most Australian wine introduced by China early in 2021 prompted that trade, previously valued as high as $1.2 billion annually, to collapse.

Penfold's maker, Treasury Wine Estates, said in 2022 it had lost 97% of its China business due to the introduction of the tariffs, it's shares rose more than 5% on news they could soon be removed.

Prior to Australia's call for an investigation into the origins of COVID-19 in 2020, Australian wines imported into China were subject to zero tariffs following the signing of a free trade agreement in 2015, giving them a 14% tariff advantage over many other wine producing nations.

Thompson is already in touch with the 10-plus Australian wineries he worked with before 2021, along with some newer players, in expectation that tariffs will soon be removed.

Though he says this is good news, perhaps paving the way for the return of Australian wine to the Chinese market by early next year, he is not necessarily expecting business to bounce back immediately.

"I don't think that's realistic any time soon. However, for a lot of good quality Australian wine producers ... customers still know the wines and I think will re-engage with those wines fairly readily," he said.

Layla Wang, co-owner of Trio Wine Bar in Beijing agreed that Chinese market perceptions of Australian wine haven't changed in the years since it was last available, with no clear winner in the battle to take over Australian wine's market share.

The bar's small cellar is lined floor to ceiling with bottles of wine from all over the world, and Wang said the market has become more crowded as people seek out new and different wine experiences, leading to the increased popularity of homegrown Chinese wines, biodynamic and natural options.

"I think even if people have been away from Australian wine for a while, every time we talk about this category of wine, we all think it's a very good quality wine," Wang said, sat at her bar.

"For us, we're definitely delighted as it signifies offering more choices to our customers. For consumers who haven't had Australian wines for years, many will be eager to try them again."

(Editing by Simon Cameron-Moore)