Since November 2020, importers of Australian wine have had to pay a 120-220% ‘deposit’ on wines to clear Chinese customs (CIQ). This has been in response to claims of Australian wineries dumping subsidized wines into China, adversely affecting local producers. The net effect has been a collapse in wine exports to China.
And news broke earlier this week of a 5-year anti-dumping tariff against Australian wines. What this means is that Australian wines will be hit with between 120-220 % charge when they are processed through China customs (CIQ). Take for example a $AUD 10 wine. It will be hit with up to $22 in tariffs. When you add in the cost of shipping and agents fee, the cost of the wine will be between $34-36 per bottle. Before the anti-dumping ‘deposit’ was introduced (back in October 2020), wines were subject to a 29% customs and excise fee, meaning that the cost of the same bottle was around $16-17 to import. So when you add on wholesale or retail margins, the wine would be extremely expensive and difficult to sell.
So what does this mean for us? Well, firstly, we were directly affected by the ‘deposit’ fee. One of our shipments was delayed in being processed through CIQ due to a labeling issue and then became subject to the anti-dumping ‘deposit’. The pallets arrived in October and are still in a customs warehouse somewhere in Shanghai (…almost 6 months later). So, do we pay the tariff or have the wine returned to Australia? We hope that we can pay the tariff over time and eventually get the wines out.
In addition, the tariff also means that we won’t be importing Australian wines in the near future. We will rely on wines in our storeroom for the next 12 months or so, and drawdown our stock levels. Some popular reds are already getting quite low, and the demand is still there for Aussie shiraz in particular. It will be consumers who miss out.
After 12 months, who knows. We will have to reassess our business model and pivot to importing wines from other countries. We have already started negotiating with a winery from New Zealand and hope to have an order on the way in the next couple of weeks. We have also diversified our business and now operate the café and still have our B2B distribution business of Australian and New Zealand beers, ciders and soft drinks which helps keep the business ticking over.
So if you’re after an Aussie wine and you’re in China, now is still a good time to get some.