Coronavirus: Message in wine bottle a bitter draught to swallow

Aust­ralia’s wineries are fearful they will be caught in the backdraft of a widening trade war with China.

Roger Follett of Lake Breeze winery in Langhorne Creek. Picture: Morgan Sette

Battered by the collapse in tourism and ban on cellar door sales, Aust­ralia’s wineries are fearful they will be caught in the backdraft of a widening trade war with China as payback for Canberra’s backing of a coronavirus inquiry.

With China now targeting Aust­ralian beef and barley — and its ambassador Cheng Jingye having­ threatened that wine exports may also be hit — many local winemakers would struggle to absorb further losses with so many traditional revenue streams having dried up during the pandemic.

With Australian wine exports to China surging 18 per cent last year to a record $1.2bn, overtaking French wine exports to China for the first time, the biggest players in the domestic wine industry would have the most to lose from a backlash due to their huge focus on the Chinese market.

Smaller wine brands would also be affected, such as Lake Breeze in Langhorne Creek, an award-­winning South Australian boutique­ winery where the Follett family has been growing grapes for more than 120 years and making wine for almost 30 years.

Lake Breeze general manager Roger Follett told The Australian China now accounted for about 20 per cent of the company’s total sales and 60 per cent of exports.

“Hopefully all this is just posturing by China because if it’s not a lot of people are really going to struggle,” Mr Follett said. “It’s not just the volume of wine that’s sold into China, the best thing for us is that they are buying the higher-end stuff.”

“If it does turn into a trade war we might end up with the same situation after the GFC, when Australian exports were then heavily skewed towards America, and suddenly because that market dried up the local market here was flooded with cheap stuff.

“Given all the pressure facing the industry anyway, this is absolutely the last thing we need.”

Mr Follett said there were broader lessons out of the pandemic about the need to diversify export markets. “I think things are going to change, we are going to need to spread our focus around a lot more and not just put all our eggs in the one basket,” he said.

Adelaide Hills winemaker ­Tar­as Ochota has developed an international cult following with his Ochota Barrels winery, even hosting Mick Jagger and Charlie Watts at his cellar door on the Rolling Stones’ 2014 Australian tour.

Mr Ochota told The Australian he had always been wary of placing too much store on the Chinese market and had instead opted for a more diverse exporting strategy.

“It’s the big boys with the most to worry about. I would estimate we only export about 5 per cent of our production to China, so we should be right,” he said.

SA Wine Industry Association chief executive Brian Smedley told The Australian the industry had been “disappointed to hear the remarks out of China”.

“We can’t really do much about it, it’s a matter for the politicians to diplomatically go about their business, but we are obviously concerned about the impact,” he said.

Mr Smedley said the closure of cellar doors aside for takeaway in SA and the total collapse of all tourism was already having a huge toll on the wine industry in what was proving to be a year from hell.

“It started with strong winds that knocked flowers off the vine … we had frosts, rain, bushfires, and now COVID-19. We certainly don’t need a trade war amid this.”