Wine Australia’s funding slashed by almost a third as it chases new drinkers in southeast Asia

The peak body will have its budget cut by a third as it defends market share in North America and Britain while chasing new clients in southeast Asia to counter the loss of China.

The nation’s chief agency charged with promoting Australian wine to the world will ramp up its marketing in the United States and Canada to gain new drinkers, defend its dominant position in Britain and direct more funding to emerging markets across Japan, Korea and other parts of southeast Asia.

The renewed push by Wine Australia to highlight Australian wine to drinkers from San Francisco to Seoul is part of a diversification strategy to counter the complete collapse of the billion-dollar Chinese market after the imposition of crippling tariffs triggered by the ongoing trade war between China and Australia.

Winemakers have been desperate to fill the huge hole in their exports since Beijing punished Australia with tariffs of more than 100 per cent on imported Australian wine as part of a wider attack on key agricultural industries such as seafood and timber.

Many are eyeing off the rising middle class in Asia as a new and lucrative wine drinking demographic.

However, Wine Australia will embark on its new pitch to North American, British and southeast Asian wine drinkers to pick up a bottle of Australian wine from their local bottle shop or restaurant wine list with a substantially reduced budget, after the 2023 budget papers revealed the agency‘s funding is to be slashed by 28 per cent.

The key culprit behind the reduced funding to Wine Australia is the lowest national wine crush this century as winemakers across Australia‘s most loved wine regions, from the Margaret River in Western Australia to the Mornington Peninsula in Victoria, report smaller harvests.

Winemakers have been desperate to fill the hole in their exports since Beijing punished Australia with tariffs. Picture: AFP

Wine Australia is funded by grape growers, winemakers and exporters through levies and user-pays charges, and by the federal government which provides matching funding for research, development, and adoption investments.

Budget papers detailing the appropriations for Wine Australia show its total resourcing for 2023-24 is estimated to slump to $41.145m, down from $57.506m in 2022-23. The fall in funding will flow from a combination of shrinking levies paid by winemakers to Wine Australia – due to the lower grape harvest – and then that mirrored in lower matching funding paid by the federal government.

The budget papers report that funds from levies paid by participants in the wine sector are estimated to fall to $14.57m in 2023-24 from $17.877m in the previous financial year. This has had a ripple effect on government funding to Wine Australia, falling to $24.31m in 2023-24 against $30.265m in 2022-23. However, over forward estimates that government funding is tipped to rise to around $29.2m per year to 2026-27.

Wine Australia will now focus on a greater marketing spend in established and emerging markets to help fill the gap of more than $1.2bn in lost export sales to China since the imposition of tariffs.

“In this operational environment, Wine Australia is seeking to intensify marketing efforts to gain a greater market share in established markets of the United States of America and Canada, defend share in the United Kingdom and diversify into emerging markets including Japan, Korea and South East Asia,” the budget papers report.

“Market attractiveness has been determined through quantitative and qualitative market insights, reflecting the opportunity for commercial and premium wine. Specific approaches for each market will be informed and refined by category and consumer insights, direct in-market learnings, sector feedback and alignment with other cross-sector activations and Austrade.”

Since the crackdown on Australian wine by China many local winemakers have redirected their own efforts to nearby Asian markets with wine drinkers in countries such as South Korea, Singapore, Thailand, Vietnam, Taiwan and Japan eagerly buying up our wine.

The budget papers report that growth in the value of exports to southeast Asia in calendar 2022 continued through with a 16 per cent rise in value to $305m for the period.

In the year ended December 2022, Australian wine exports increased by 1 per cent in volume to 623m litres and declined by 4 per cent in value to $1.94bn. The rise in volume relative to value was driven by growth in the shipments of unpackaged wine, particularly to the US and Canada, as global shipping challenges improve, the budget said.