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  • Australian wine situation

    29 January 2021Par Richard Krystkowiak

    Survey of the current situation through interviews with 3 importers, 7 medias and 1 retailer.

    The situation remains unclear for the various players in the world of wine, but everyone is attentive to possible changes because they believe that there will be a fairly significant impact.

     

    We are currently in a phase of uncertainties, businesses are concerned according to them but for some this does not yet influence customers “without enough information, they won’t be affected too much”, “It has little influence on consumers who know nothing about the wine industry”. The media have been paying close attention to the situation, interviewing Australian players and wanting to see the direct impact of this move and how they deal with it. According to one media “Australian wine producers, especially some large, listed wine groups are very cautious in their words and deeds, watching and speaking more cautiously”, they are also in a full-doubts period.

     

    Social networks were the first witnesses to the impact of the situation “there is clearly not the same passion and enthusiasm for Australian wine as before”. The media noted the decline in promotion of Australian wine, in return for regular and precise monitoring of news and changes concerning the situation. The promotion and campaign of Australian wines are currently invisible, on standby according to the media interviewed. Given the delicate and uncertain situation, Australian brands have reduced their budgets for the promotion of their wines. “Instead, the reports about Chinese wines are more visible. The Chilean Wine Authority is also stepping up its efforts to promote Chilean wines. Other regions, such as Italy, Georgia, France and so on, are also becoming more confident about the development of their wines in the Chinese market”.

     

    For the long-term impact, importers are waiting to finish stocks to see how the situation unfolds. It is almost impossible for them to predict their position in the face of possible future events:

    • Ruby Red: “We don’t recommend raising the price of Australian wine and hope that the policy will move in a good direction as soon as possible. If not, we have other countries ’wine to choose from.”
    • com: After selling out the stocks, we won’t stock any Australian wine. As far as I’m concerned, there won’t be any price increase, but some bundle sales. The cost is now increased by 260%, so we continue to import only wines of famous brand for the continuity of our company.”
    • 名庄靓年 Ming Zhuang Liang Nian (retailer) : “For our brand of Australian wine imported by ourselves, there are currently stocks and there is no price increase, but we no longer use Australian wine as a way to promote or attract online traffic

     

    According to them, the future impact will mainly concern Australian wines from entry-level to mid-range. “I have a feeling that some of the lower and mid-priced wines from Australia are likely to be the most affected. Because these drinkers are relatively price-sensitive” explained a media, and “These wine consumers will turn more to inexpensive alternatives that resemble Australian wine, they should turn to other wines from other countries if anti-dumping and countervailing measures affect import prices too much and thus exceed their budgets”. In terms of channels, the most affected ones will be large volume purchase and catering business (Ruby Red), “Those who do the wholesale in third, fourth and fifth tier cities may be affected” (BEIJING ERSHANG JOINTEK FINE WINES, LTD) and Retailers will be the most affected. After selling out the stocks at the beginning of this year, they’ll turn to other countries ’wines.” (WAJIU.COM).

     

    Chile seems to be the obvious alternative of the Australian wines that will be impacted (entry-level to mid-range wines), in terms of taste and price, Chilean wine is the closest to Australian wines. But more generally all of our interviewees agreed that it is the wines of the new world that will be the most suitable to easily replace Australian wine (China, Chile, Argentina, South Africa, New Zealand etc). A media underlined an important point on the evolution of the promising Chinese wine which is becoming more and more important among Chinese consumers: “And for China, we are right on our doorstep, no tariffs, no international freight charges, and because of a younger generation’s love of domestic goods, Chinese wines benefit from that”. Old world wines (France, Italy, Spain, etc.) can also benefit if they adapt and play their cards at the right time. But for that they need to invest and support the local market to ensure their visibility to raise up and position them as a real alternative to Australian wines, which they can “People seem to think that France and Italy will benefit the most from it, maybe because they have a closer price structure to Australian wines. I guess distributors will have to remain consistent with their offer in term of price but also in term of wine style. Argentina got some great full-bodied Shiraz and Cab that could take over and Rhone Valley obviously have amazing Shiraz as well for example” commented a local distributor.