Sales of South Australian wineries, vineyards weighed down by Chinese tariff threat
The threat of Chinese tariffs on Australian wine exports is weighing on sales of SA’s wineries and vineyards as several high profile operations in the state’s premier regions hit the market.
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The threat of Chinese tariffs being slapped on Australian wine exports is expected to weigh on sales of the state’s wineries and vineyard operations as the sector emerges from the COVID-19 crisis.
Major winery and vineyard sales have been largely absent since the onset of the pandemic, and the uncertainty is likely to linger for longer following the Chinese government’s recent announcement of an anti-dumping investigation into Australian wine.
Prominent transactions this year include the sale of the 220ha Jubilee Park Vineyard in the Riverland to Hong Kong billionaire Li Ka-shing’s Belvino Investments, while the Fox Creek Wines operation in McLaren Vale is currently under offer.
Colliers International agribusiness director Tim Altschwager, who recently listed for sale the Stonehaven winery and vineyard in Padthaway, said the threat of Chinese tariffs was creating uncertainty for investors.
“I think the biggest thing in the winery industry is the Chinese trade issue - it’s been around for a while and there’s been a bit of nervousness because of what’s happened with barley and cattle tariffs,” he said.
“Chinese (investor) interest might have dissipated a bit and there’s uncertainty around the trade issue.
“The perception is that we might have had a decrease in values - maybe 10 per cent - but it’s only perception because of the uncertainty.”
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China is Australia’s largest wine export market with $1.2 billion worth shipped last financial year and South Australia produces about half of the nation’s wine.
As the country’s consumption of Australian-produced wine has increased in recent years, so has Chinese investor appetite for local winery and vineyard operations.
However Langley & Co. managing director Toby Langley, who recently listed for sale an “iconic Barossa Valley wine business”, said interest from Chinese investors had been slowing for some months.
“Prior to COVID Chinese interest in the Barossa and other regions was there but continuing to decline,” he said.
“There’s been a strong recovery in the wine industry and we’re now seeing consolidation amongst industry players rather than people from outside coming in - as values have gone up the easy money is gone.
“I think the China piece and what’s going on in China is the next frontier for the Australian wine industry.
“For most of the producers who don’t do big business in China it’s not going to be an issue, but for others who do business in China, they will have to find somewhere else to send their product.”
Mr Altschwager agrees that further consolidation of the local wine industry is likely following the disruption caused by COVID-19.
“The smaller end of the industry has been hit the hardest,” he said.
“If they don’t have the routes to market, if they don’t have good distribution channels and an established online presence, then they would have been hit pretty hard.”
