Rosenthal Wines loses $240,000 overnight due to brutal Chinese tariffs

Beijing’s brutal feud with Australia has shattered countless local businesses, with one losing a staggering amount in the crossfire.

Coby Ladwig has spent years building up his winery – only to have the business brought to its knees in an instant by China’s savage trade war.

The independent winemaker, who took over Western Australia’s Rosenthal Wines in 2012, has spent seven years creating a thriving business relationship with China.

He travels to the superpower up to four times a year, and exports to China represented around 50 per cent of his total business before harsh tariffs of up to 212 per cent on Australian wine were announced recently.

As a result, Mr Ladwig has lost a crippling $570,000 in sales over the past year which would have gone to China if it weren’t for the tariff hikes – and a staggering $240,000 was lost “overnight” due to cancelled orders for Chinese New Year.

He told news.com.au it was a “massive hit” to the business which had already been grappling with the loss of export due to the coronavirus pandemic.

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Coby Ladwig is one of countless winemakers crippled by our trade war with China.

“I really like the Chinese culture and people and we had built up a really good following, so to have all that cut off has been pretty hard to take,” he said.

“I couldn’t believe the relationship was just cut off overnight – there was a feeling of disbelief, because we heard rumours something might be happening, but there was a bit of denial at first.

“I’ve had quite a few sleepless nights and it’s obviously devastating for us.”

Mr Ladwig said the stoush also affected grape growers and other workers, and that he had no idea what the sanctions would mean for his business moving forward.

“I’ve never once had to pull out of a grape contract in my life and throughout COVID we stuck by our growers and workers, but at the moment I just don’t know what is going to happen,” he said.

“Everyone’s in the dark and we don’t know how long this will go on for – it’s scary times.”

Mr Ladwig also pointed out many Chinese importers were just as devastated by the tariffs, with some losing their whole business in an instant.

“There are victims on both sides and I feel really sorry for Chinese importers who love Australia and our culture – this is out of their control and they’ve been told their business is basically over, so it’s horrible.”

He said there was not enough demand domestically to recoup the losses from Chinese exports, and said there were few markets the industry could pivot into that would be as profitable.

Industry organisation Wine Australia said in a statement the temporary tariffs were “extremely disappointing” and would “significantly impact Australian grape and wine businesses”.

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China’s restrictions on Aussie industries show no sign of stopping.

But there is some hope on the horizon.

Direct wine-to-consumer business, Naked Wines, has announced a $5 million Rescue Fund and a number of public commitments to help support Australian independent winemakers like Mr Ladwig who are set to take the hardest hit from China’s sudden and hefty wine tariff hikes.

Under the Stop the Squeeze campaign, the company will honour previous commitments with winemakers and won’t drop contracts as a result of the tariffs, will ensure fair prices continue to be charged and will help those affected by the policy via the rescue fund.

Managing director Alicia Kennedy said Australia’s independent winemakers reliant on traditional channels were going to suffer the most over the next 12 to 18 months.

“For the smaller winemakers and grape growers, there’s a lot of fear and uncertainty around their future; they have committed to vintage and invested upfront, and they’re understandably very concerned they’ll be driven to the wall by retailers dropping or bartering down their contracts to take advantage of cheaper sources,” she said.

“Unlike the bigger winemakers, many of Australia’s independent winemakers don’t have the balance sheets needed to pay the tariffs or to hold their wine in storage for future years when there will be less flowback supply into the market.

“This will place deflationary pressure on the prices of their grapes and wine – taking advantage of their vulnerability and leaving them holding wine and fruit from dropped contracts and commitments.

“There is a very real danger that many local winemakers will become collateral damage in this situation and be left without a leg to stand on.”