After Australian wine exports to China plummeted by 98 percent, the Australian wine industry is turning its attention to other markets. According to Australian broadcaster ABC News, Australian wine producers are now being encouraged to return to traditional markets such as the United Kingdom, the United States, Canada and Germany.
Photo courtesy of: Le Wine Guest
But returning to the market is not an easy task, and with it comes a situation where both Australian wine and grapes are dropping in price.
Australian wine prices may be reduced in order to move to other markets
We have to try these markets again," said Matthew Tydeman, director of international wine brokerage Ciatti Australia. But we have to realize now that we are competing with Chile, Spain and Argentina for Price Point*. And those price points are much cheaper than what we're currently seeing in Australia.
*Price point: The term price point has several related uses in economics. All of these usages revolve around the retail price of a good and the way consumers interact with this price. One of the common uses of this term is to refer to the retail price.
In layman's terms, it is more than the low price of dry but others Chile, Spain, Argentina wine.
Tydeman said: Australian red wine prices have started to soften and we have heard that prices have dropped compared to last year.
Demand for white grapes seems to be strong at the moment, with Chardonnay, Sauvignon Blanc and Pinot Grigio all in demand for the time being. I expect white wine prices to stay the same, but they could easily drop if we get a big harvest from the grape harvest.
Australia's winegrowers and winemakers
Tom Guthrie, owner of Grampians Estate, said growers and winemakers remain uneasy about the decline in wine trade in the Chinese market.
We don't export a lot of wine to China, most wineries do, except for the larger ones, which have a bigger share.
In the long term, this will have an impact on our profits. Other markets are not easy to find, especially for smaller breweries.
I also feel sorry for the medium-sized wine companies. We have business with a young Chinese exporter in Melbourne and their business is under pressure, not just ours. Everyone in the Australian wine industry has been affected.
The outlook is not optimistic
China's anti-dumping investigation into Australian wine is due to end by the middle of this year, but wine producers say they don't think the situation will change much.
Bottled wine has basically run its course and there are still some bulk wines coming onto the market, but in very small quantities, says Tony Battaglene, managing director of Australian Grape and Wine. Bulk wine is important and it's a nice little profit, but it's not going to replace the premium product that bottled wine is.
All in all, those in the Australian wine industry don't hold out much hope that tariffs will be reduced or eliminated in the near future.