TRANSCRIPT
Preparing for the Lunar New Year, Alex Xu hopes the Dragon will breathe life into his Australian wine export business, known as Royal Star Wine.
“They can make the business fly, they can make the good fortune for all the people.”
Mr Xu is among the hundreds of Australian operators who have structured their business around China's appetite for Australian wine.
But that all changed in 2020 when diplomatic tensions all but locked local producers out of the market.
In China, sales of locally produced wine fell by 26 per cent between 2020 and 2022 while the volume of Australian wine sold there was down 78 per cent over the same period.
China imposed tariffs on Australian bottled imports of up to 218 per cent.
The 1.2 billion-dollar export trade shrank to just $8 million.
Regional growers still feel the impact< with record low grape prices on the back of a global glut.
But with China set to reconsider its trade restrictions, Australian producers are looking to the future.
Family-owned winery Bec Hardy Wines bears the name of the first producer to export wine from South Australia.
This generation of wine-makers hopes to be among the first to get back to China.
The director of sales and marketing from Bec Hardy Wines is Richard Dolan.
"I think we'll have some good initial supply to be able to meet the initial demand that we are thinking may come from China, but we've certainly not planned for the kind of volumes that we would have been doing in China back in 2019 and before."
Economic troubles in China, however, are likely to present new challenges according to ANZ Chief economist for greater China, Raymond Yeung.
"The major worry we have on a macro basis is the deflation story. It may be the first time that China is going to see the nominal GDP growth lower than the real GDP growth."
A sharp decline in consumption and rising demand for local vintages is also set to affect producers.
Price is now emerging as a major driver of purchasing decisions.
Raymond Yeung explains.
"If red wine or white wine imported from Australia or the rest of the world is considered an affordable wine, the economic downturn may not be that impactful."
And Richard Dolan is remaining optimistic for the wine market.
"We'd be foolish to think that the opportunity is going to be as big as it was prior to the pandemic but I think more broadly there is still opportunity for the right brands in market at the right price point with a great price to quality ratio.”
China has until the end of March to review the tariffs.
