For years, China’s appetite for Australian wine seemed insatiable. Chinese drinkers loved the full-bodied reds from Australia so much that many vineyards switched their white grapes for darker varieties. Wineries even reverted to using corks — rather than more convenient screw caps — to seal their bottles because Chinese consumers liked it.
But then, it was all over.
In April 2020, Morrison, then Prime Minister of AustraliaCalls for independent investigation into origins of coronavirusThe Chinese government was very angry and condemned it as an attempt to shirk its responsibility for epidemic prevention.Political manipulation” and mobilized the country’s massive economic power in response.
China imposed punitive tariffs on Australian wine, and the country’s largest overseas market almost disappeared immediately. In 2021, after the tariffs were imposed, Australian wine exports to China wereA 97% dropStorage tanks at local wineries are filling up with unsellable Shiraz and Cabernet Sauvignon wines, driving down prices for red grapes.
advertise
Australian grape growers are still suffering losses. The demand for red wine is lower this year. They are faced with the choice of selling the grapes at a loss or not picking them to minimize costs. Grape growers like Mauro Travaglione are even doubting the future of their family business.
Travaglione, whose 53 hectares of vineyards are located outside Adelaide in Australia’s Riverland region, has not produced any wholesale red wine since the tariffs came into effect. Last year, he sold the red grapes he grew to other wineries, and although he barely broke even, he felt lucky.
“It’s a struggle every day,” Travaglione said. “You have to think about whether it’s worth it to keep doing this.”He and his family have lived there since buying a small orchard in the rural town of Waikeri.
Travaglione inspects the harvested Sauvignon Blanc grapes.
Travaglione inspects the harvested Sauvignon Blanc grapes.
The Chinese prefer red wine, and Australian growers are now being encouraged to switch to white wine grapes.
The Chinese prefer red wine, and Australian growers are now being encouraged to switch to white wine grapes.
Travaglione has not produced any wholesale red wine since China imposed tariffs.
Travaglione has not produced any wholesale red wine since China imposed tariffs.
When China first opened its market, Beijing used access as a carrot. Now that China’s economy is firmly ranked second in the world, the threat of losing the Chinese market with 1.4 billion consumers is a stick that no country or industry can bear.
China has exerted political pressure on Taiwan by blocking imports of Taiwanese pineapples, apples and fish. After Lithuania made overtures to Taiwan, China imposed an informal trade blockade on the Baltic state.
China has taken a softer diplomatic stance in recent months, sparking optimism that Australia-China trade relations could improve. Last November, Chinese leader Xi Jinping met with Australian Prime Minister Anthony Albanese at the Group of 20 summit. A month later, Australian Foreign Minister Penny Wong becameFour yearsThe first senior Australian diplomat to visit China. Both sides agreed to discuss trade issuesStart a conversation.
advertise
But there are still many disputes to be resolved. Shortly after Australia called for an investigation into the origin of the coronavirus, China’s Ministry of Commerce investigated whether Australia was dumping wine in China at artificially low prices.An investigation was launchedIn March 2021, China imposed anti-dumping duties of up to 218% on Australian wine imported into containers of 2 liters or less for a period of five years.
The punitive measures do not end there. Although no anti-dumping duties are imposed on red wine that is shipped to China in large containers and then repacked, Australian farmers say their goods are often stranded at Chinese ports for months and cannot clear customs. China has also banned imports of other products from Australia, including coal, barley, cotton, and lobster.
Harvesting grapes in the vineyards of Travaglione. The much more unusual rainfall this year was another challenge.
Harvesting grapes in the vineyards of Travaglione. The much more unusual rainfall this year was another challenge.
“It’s hard to encourage the younger generation to enter the industry,” Travaglione said.
“It’s hard to encourage the younger generation to enter the industry,” Travaglione said.
The grapes Travaglione picks from his vines will be tested for sugar and tannin content.
The grapes Travaglione picks from his vines will be tested for sugar and tannin content.
China was once the largest buyer of Australian wine, accounting for 40% of Australian wine exports, but now its purchases have fallen to 23rd place, behind countries such as Sweden and the Philippines. This is a devastating blow to the Australian wine industry, which has refocused its priorities since the two countries reached a free trade agreement in 2015.
according toWine AustraliaWith about 95 per cent of Australian wine bought by China being red, growers in the Riverland region have increased plantings of Cabernet Sauvignon, Shiraz and Merlot grape varieties by nearly 650 hectares over the past decade, even as the overall area of ​​land devoted to grapes has fallen.
“We’ve been lured by China,” said Tim Whetstone, the South Australian state legislator who represents the Riverland, the country’s largest grape-producing region. He estimates that half of the Riverland’s red grapes will not be picked and sold this year.
“We put all our eggs in one China basket, and now we’re getting bitten,” Mr. Whetstone said.
Nikki Palan is one of the Australian winemakers who has dove headfirst into the Chinese market. A fluent Mandarin speaker, she began selling bottled wine to China in 2014, and at her peak sales reached more than 2 million bottles a year, accounting for about 90% of her business. When the tariffs were imposed, her business disappeared.
Travaglione visits a winery in South Australia's Barossa Valley.
Travaglione visits a winery in South Australia’s Barossa Valley.
Taste wine made from the grapes he grows at the winery.
Taste wine made from the grapes he grows at the winery.
Travaglione, who was drinking coffee with his mother, brother and workers, said that if the tariffs remain in place, “many growers will just pull out their vines and walk away.”
Travaglione, who was drinking coffee with his mother, brother and workers, said that if the tariffs remain in place, “many growers will just pull out their vines and walk away.”
She has tried products that aren’t affected by tariffs. Initially, she made spirits like vodka and brandy, and even tried making grapefruit sparkling water, but those didn’t sell well. Her situation became more complicated when Australia went into lockdown to curb the coronavirus, as it was difficult to drum up new business while staying at home.
Eventually, she opened a tasting room in Melbourne and shifted her sales focus to Australia. Now, most of her sales come from domestic markets. She said she has been looking for other overseas markets, “but none of them can replace China in terms of volume.”
advertise
Despite all this, she believes the problem is not China but a lack of diplomatic savvy by the previous Australian government. “We publicly shamed China, and in my opinion, we shouldn’t have done that,” she said.
The pain is deepening in Australia, where conglomerate Accolade Wines has told its partner vineyards in the Riverland region that producing more red wine this year will only further depress prices for red grapes next year.
Melanie Kargas of the CCW cooperative, an organization of grape growers, said paying growers to switch to white grapes is a new twist.
Melanie Kargas of the CCW cooperative, an organization of grape growers, said paying growers to switch to white grapes is a new twist.
Calgas tests the sugar content of glucose.
Calgas tests the sugar content of glucose.
South Australian Wine Masters Association senior winemaker Kelly Wheeler and Kargas taste wine from a tank.
South Australian Wine Masters Association senior winemaker Kelly Wheeler and Kargas taste wine from a tank.
Meiyu Wines said it would not buy more red grapes under a multi-year contract but to address oversupply, the company wouldPaying growers to ‘mothball’ vineyardsThe company is also offering to pay growers to switch from red vines to white vines. Melanie Kargas, business manager for the CCW cooperative, which includes about 500 grape growers in the Riverland region, said she had never heard of such a proposal before.
“These are not profitable options, they are more like stagnant options,” said co-op member Will Swenstead, who owns a plantation at Overland Point in the Riverland.
Svenstedt chose not to harvest his red grapes. He said it was disappointing because he had invested heavily in Shiraz varieties over the past five years to meet demand from the Chinese market. But compared with other farmers in the area, he was doing better because he also grew watermelons, he said.
Farming is never easy, subject to boom-and-bust cycles. But growing grapes was something Travaglione was destined to do. Born into an Italian winemaking family, his parents came to Australia in the 1950s, and he always hoped his children would one day take over the family farm.
In addition to growing grapes, Will Swenstead also grows watermelons, and his farm is doing better than other grape plantations.
In addition to growing grapes, Will Swenstead also grows watermelons, and his farm is doing better than other grape plantations.
Svensted said he had invested heavily in Shiraz grape varieties because of demand from the Chinese market.
Svensted said he had invested heavily in Shiraz grape varieties because of demand from the Chinese market.
“We’ve been seduced by China,” said Tim Whetstone, the South Australian state legislator who represents Riverland, the country’s largest grape-producing region.
But now, at 55, Travaglione is reconsidering whether this is the life he wants for his children. Tariffs aren’t the only challenge. Unusually heavy rains this season have caused the nearby Murray River to overflow, and the wetness has increased the risk of crop disease. The cost of fertilizer, transportation and other operating expenses has also increased.
After his son expressed an interest in winemaking, Travaglione instead encouraged him to explore other careers. His son will study mechanical engineering at university next year.
advertise
“It’s very sad,” Travaglione said. “It’s very hard to encourage the younger generation to enter this industry.”
Recently, he learned that his neighbor, a third-generation grape grower, had decided to exit the industry and put his farm on the market. Travaglione said even exiting the industry is not easy because there are many vineyards for sale but no buyers.
“If this continues for another two or three years, a lot of growers will quit and walk away,” he said. “There’s no hope.”