Federal government funding to the tune of almost $1 million for Australia’s peak wine association will help wine producers tap into markets outside of China but more needs to be done to drive consumer demand, a South Australian wine producer says.
Richard Dolan, co-owner of Bec Hardy Wines, says no amount of funding for industry diversification to other markets will make up for the loss in the China market since trade disputes last year.
“The maths is indisputable,” Dolan tells SmartCompany.
The federal government announced it will give Australian Grape & Wine a $998,000 grant to explore new international marketing options for locally produced premium wines, with marketing pilots set to launch in Japan and South Korea.
Bec Hardy Wines, a family-owned wine business based in McLaren Vale South Australia, was recognised by Austrade in the Australian Export and Investment Awards last year for having established nine new markets in just five months.
Dolan says he implemented a risk management strategy in July last year in a bid to find other markets outside of China.
He and his partner Bec Hardy now sell their premium wine in Southeast Asia, including in Vietnam, Thailand, Indonesia, Japan and Hong Kong.
While Dolan welcomes industry support from the Australian federal government, he says many businesses in the private sector are already addressing the issue of diversification.
There are already many companies providing business connection services, and virtual platforms to connect buyers with sellers, he says.
Dolan wants to see the federal government create consumer demand for wine exports around the world by promoting Australia as a “clean, green and pristine environment”.
“Once we start creating consumer demand in markets then we will get the pull through effect of importers and distributors approaching Australian producers, trying to source products to satisfy that consumer demand,” he says.
In announcing the grant, agriculture minister David Littleproud said the funding would explore opportunities for the industry to diversify its overseas markets.
“There is an enormous amount of untapped potential in these markets, and the more inroads we can make into new markets the better off our winemakers, exporters and grape growers will be,” Littleproud said.
The freshly announced grant is part of the federal government’s Agricultural Trade and Market Access Cooperation program and $72.7 million Agri-Business Expansion Initiative (ABEI).
The funding comes after a year of turbulent trade relations with China, one of Australia’s biggest wine markets.
In November last year, China slapped dumping and countervailing duties of up to 218% on Australian wine imports, after it alleged wine exporters were fixing prices lower than the cost of manufacturing.
At the time, China accounted for 36.7% of wine export revenue in Australia, according to IBISWorld.
Tony Battaglene, chief executive of Australian Grape & Wine, said the funding will help Australia’s grape and wine sector mitigate the $1.2 billion gap left by the closure of the China market.
“This investment will establish a framework for our sector’s effort to explore new market opportunities and overcome the challenges in front of us,” Battaglene said.
Australian Grape & Wine will work with Austrade, Wine Australia, the Department of Agriculture, Water and the Environment, and state government agencies to roll out the new campaigns.