Inland producers to weather China tariffs despite ‘difficult times ahead’

By Samuel Squire

The commercial wine sector is in a relatively good position to weather any potential disruption resulting from China’s anti-dumping wine tariffs on Australian wine, according to the chair of the Inland Wine Regions Alliance (IWRA).

Jim Caddy raised the implications of the tariffs for inland producers at the Riverina Wine Grapes Marketing Board (WGMB) annual general meeting in Griffith last week.

Caddy says while some smaller grape buyers will not be buying fruit due to their reliance on China, “the majority of winemakers who buy fruit from the Inland regions have strong sales on the domestic and export front which will still need to be supplied”.

“The major implications of the Chinese tariffs are for the cool region areas where a large percentage of their production has been sold and there are few opportunities to sell elsewhere,” he said.

“This may encourage the wine producers in these regions to lower their prices to try and increase sales which will not be good for the industry as a whole.”

Caddy said although, “difficult time are ahead,” the commercial wine sector doesn’t need to panic and resort to discounting as this would only lead to problems in the future.

He said there have been reports that some buyers had pressured winemakers to lower their prices.

“Unfortunately, we are already seeing some major buyers trying to pressure winemakers in lowering their prices for commercial wine despite what the numbers say.

“There will be some small winemakers who will sell wine at distressed prices due to a myriad of reasons, however the majority of larger wine companies have relatively low stock levels and will be able to resist this predatory action.”

There is reportedly very little stock available due to the lower than average grape crops of the last two vintages combined with good sales volumes to the present.

Caddy believes demand for white grapes is set to remain strong.

“While market indicators suggest that there will be some reduction in prices for red grapes in the inland regions, those same indicators suggest that white grape prices will increase,” he said.

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