Canberra partly to blame for Chinese import restrictions: De Bortoli

The boss of De Bortoli Wines believes exporters are paying the price for the government ‘overreacting’ to China’s handling of COVID-19.

Wine exporters ‘likely to struggle’ to find customers for their wine to replace lost Chinese orders: Darren De Bortoli at the De Bortoli Winery

The boss of one Australia’s largest family-owned wineries, De Bortoli Wines, believes exporters of everything from wine and beef to barley and coal are paying the price for the federal government “overreacting” when it came to China’s handling of COVID-19, with wine exporters likely to struggle to find customers for their wine to replace lost Chinese orders.

Darren De Bortoli told The Australian the winemaker was a small exporter to China but was bracing for rumoured trade sanctions or tariffs expected to be applied by the Chinese government as political friction between Beijing and Canberra wreaks havoc in major exporting industries.

“We are not overly exposed to China but we do a fair bit,” Mr De Bortoli said.

“We have heard there could be retrospective tariffs to Australian wine if they believe we (the industry) have been dumping, and obviously it concerns us even though we are not overly exposed, as it is a profitable market.’’

De Bortoli unveiled its 2020 results, swinging to a loss of $5.18m from a profit of $20m in 2019.

The dive into the red was partly driven by the impact of COVID-19 and the shutting down of restaurants, cafes and other venues that sell De Bortoli’s wines as well as depressed international markets that saw sales budgets missed by as much as 65 per cent.

De Bortoli also invests heavily in the sharemarket, with the global rout in equities denting the value of its $40m-plus shares portfolio.

Mr De Bortoli said the prickly relationship between Australia and China and fears of tariffs as high as 200 per cent would force that wine to find a new home and could push down prices for all winemakers.

“And it is not just us losing the Chinese market — all the fallout from that could be dire for the industry,” he said.

“What do you do with all your dry goods destined for China, the packaged wine that has already been produced for the Chinese market? It is not nice.”

Mr De Bortoli, whose winery was founded by Vittorio and Giuseppina De Bortoli in 1928, said some of the blame for the poor relationship with China rested with the Australian government.

“I think probably the government probably overreacted initially,” he said. “I think there was a lot of anger over the virus that spread and maybe just a more measured approach could have been better.”

Australian exporters were also likely to face collateral damage from recent trade deals between the US and China that coerced China into buying more products from America. “We have had the Trump factor who has been demanding more trade with China and that has obviously come at Australia’s expense. I think it has been China just rebalancing that trade relationship with the US and that has created some issues for us. And on the trade front, I think Trump losing (the election) could have some benefit for us, maybe beneficial.”

De Bortoli recorded revenue of $152.8m, up from $141m in 2019.

Mr De Bortoli said earnings were hurt by COVID-19. In 2019, De Bortoli saw a strong performance by its on-premise channel through restaurants and other venues and the winemaker had been expecting a 50 per cent increase in some export markets leading into 2020. However, this failed to materialise thanks to rolling lockdowns from February. In certain export markets the budget shortfall for the past five months of fiscal 2020 was as high as 65 per cent.

Mr De Bortoli said there was an upturn in sales through retail channels such as Dan Murphy’s and other liquor chains as consumers chose to consume wine at home.

De Bortoli also had a win with its partnership with Australian and international pop star Kylie Minogue, whose Wines by Kylie Minogue were proving a big success, especially in Britain.

De Bortoli’s $43m share portfolio lost some value during the year.

The 2020 accounts reveal it recently sold $6.84m worth of OZ Minerals shares it was holding, and bought $124,000 worth of Metals X stock and bought more than $213,000 worth of Mount Gibson Iron shares.

Mr Bortoli has a reputation for being something of a maverick within the Australian wine sector, for his strident views on various economic and agricultural issues to his dabbling in the sharemarket.