By Jed Lanyon
Trade uncertainties and ongoing political tensions between Australia and China have seen some Yarra Valley winemakers’ exports put on hold as Chinese distributors are concerned shipments might not make it into the country.
Yarra Glen winery Zonzo Estate were informed by their Chinese partners, they wouldn’t be having their monthly wine shipment for October sent as they couldn’t guarantee it would successfully make it into China as other export industries had been hurt by delays.
Zonzo Estate’s shipment experienced repeated delays as they were initially told there wasn’t enough room on shipping containers. Then finally when their Chinese distributors performed a routine check of their shipment, word came through that they wouldn’t be taking the order.
Zonzo Estate owner Rod Micallef explained how the situation unfolded.
“While they were doing the inspection, the guy got a phone call and said, ‘look we’re not going to take it as there is a risk that if it’s sent to China it might have to come back’.
“They haven’t cancelled the order yet, because they said they want to wait and see what the official word is because it’s all rumour at the moment. We’ve been paid and it’s just sitting there.”
Despite the October shipment on hold and November’s shipment from Zonzo Estate likely to be impacted, Mr Micallef said the distributors hadn’t requested a refund, a testament to the relationship built internationally.
“Distributors are nervous that if it gets all the way to China and it doesn’t get through customs that they’ll have to send it back, or it gets stuck there sitting in a hot container and spoils.”
Mr Micallef said three or four other Yarra Valley winemakers were in a similar position, which he described as “helpless”.
“Obviously these situations are based on what governments decide … We can’t really do much about it. Here in Australia we have invested and over in China they have invested in our brand and it’s been nearly three or four years now of building a brand in China. You don’t want all that to go to waste, we want to continue on and develop our brand over there.
“For us it just feels like it’s in the hands of the governments at the moment, we’re just waiting to see what happens. I’m not super stressed about the sale at the moment, because we have got a strong local market. It’s not like we absolutely depend on the China market. For us at the moment it’s new and it’s exciting.
“We’re lucky that wine doesn’t have a real expiry date and we’ll have plenty of time to sell that stock through local markets if that sale doesn’t go through.”
Wine Yarra Valley CEO Caroline Evans said she hopes to see a resolution soon.
“From a regional perspective, we’re concerned about having heard there are distributors contacting some of our wineries letting them know they don’t think they’ll be able to clear wine from the port.
“It’s a concern for our region, much like it is for other wine regions as China is by far and away our largest expert market.
“We’re hoping that if there is an issue that it’s a short term problem and that we can return to sending wine to China again soon.”
Speaking on ABC Radio Adelaide, Federal Minister for Trade, Simon Birmingham addressed Australia’s trade relations with China.
“This year has seen a number of decisions and actions taken in China that have the regulatory risk for Australian businesses in trading with China. Decisions by businesses as to whether or not to sell goods and where to do business are always a balance between risk and reward, and unfortunately this year, as a result of some of the anti-dumping decisions, some of the regulatory decisions that are seeing longer processing times that are unacceptably long for live seafood products like lobster, have heightened the risk significantly in some of those quarters.
“We will work as hard as we can through channels to try to get them resolved, but these are ultimately matters for China. Just as Australia is willing to have ministerial dialogue, it’s China who is currently unwilling; just as Australia is willing to maintain the flow of trade in an orderly manner, it is certain Chinese processes that have disrupted that. And so what we hope to see is a breakthrough at some stage in terms of addressing some of these issues that can restore some confidence in parts of the Australian industry, and lower what has been a growing risk profile.
A recent report released by Wine Australia valued Australia’s wine exports to China to be worth $1.26 billion, almost three times the amount of the second value exporter in the United States at $439 million.
China’s latest trade issues come from the August announcement of launching an anti-dumping investigation into Australian wine. This could see tariffs placed on wine exports, further hampering an industry that’s still dealing with the coronavirus pandemic.
But Ms Evans remains hopeful about the investigation and reiterated that Yarra Valley producers would be willing to cooperate.
“We’re confident the processes will find there has been no dumping from Australian winemakers in that market and that we’ll be back to our previous positive relationship with China.”
Dumping occurs when a company exports a product at a price that is lower than the price charged in the country of manufacture. This may lead to measures such as an additional duty on dumped imports that have damaged the local industry.
Ms Evans said while the uncertainty around exports put local winemakers “in a difficult position”, she looked at the positive news of Victoria’s coronavirus restrictions lifting to allow wineries to reopen to tourists.
“We’re obviously thrilled about the easing of restrictions for people to come and visit in the Yarra Valley. We’ve only just been able to open our cellar doors in the last week or so and that’s a key market as well as the export market for our producers.
“We feel like we’ve had a good step forward out of the difficult year of 2020, but now we’ve been hit with a negative impact.”
Mr Micallef said it had been a challenging year as the summer bushfires limited tourist numbers before Covid-19 hit in March.
“When we closed, we didn’t have a takeaway market and our five kilometre radius meant it wasn’t feasible for us to open.”
Five kilometres from Zonzo Estate’s cellar door doesn’t reach Yarra Glen or Coldstream and covers roughly half of Healesville, severely restricting any potential customers from visiting the venue when Melbourne’s Covid-19 restrictions were at their worst.
“This (trade uncertainties) is just another challenge, that’s the way we look at it. We’re excited to be open again, so it’s onwards and upwards for us.
“We’ve been setting our sights on some new projects. We’ve got a new beer coming out in two weeks, which is a really cool product. It’s a beer in a can under the Zonzo brand. We’ve got some vodka and gins to be released before Christmas.”
Mr Micallef said Zonzo Estate has had no shortage of customers looking to enquire about visiting the restaurant and cellar door.
“We’ve been responding to emails from 9am in the morning until 10pm at night. At one stage we couldn’t get them under 200. They’re down to 30 at the moment, which is amazing because they were coming in every minute.”
