Wine industry celebrates government funding & tariff wins

The Australian Government has announced it will provide $1.817 million in funding for the grape and wine sector through the Agricultural Trade and Market Access Cooperation (ATMAC) program.

The ATMAC grant will help grow demand for Australian wine and reduce trade barriers Australian grape and wine businesses face in a diverse range of export markets.

“Minister Littleproud’s support for the sector could not come at a more important time for grape and wine businesses” said Tony Battaglene, Chief Executive of Australian Grape & Wine.

“Many businesses have been working to diversify their export footprint over recent years, but this is easier said than done in what is a competitive global marketplace,” said Mr Battaglene. “The effective closure of the China market has brought this challenge sharply into focus and I’m thankful that the Australian Government is working with us to address it.”

The announcement follows a $998,000 grant awarded in 2021. It is the central plank in the sector’s effort to withstand the impact of China’s decision to impost import duties on Australian wines, which came into effect in March 2021. These duties have seen the $1.2 billion China market reduced to almost nothing in the space of 12 months, with the impacts being felt by the whole grape and wine sector, including those businesses that do not export. The only way we can begin to mitigate these impacts is to grow demand elsewhere and this grant will support the sector to do this. 

“Australian Grape & Wine will undertake a broad range of activities on behalf of the grape and wine sector as part of this ATMAC grant,” said Battaglene. “We will build on the successes enabled by the first-phase of ATMAC funding, to further our marketing and promotional efforts in Japan and South Korea.

“In addition, we’ll work closely with the Australian Government to address persistent trade and market access barriers in export markets, reducing the costs of doing business and enabling more producers to explore opportunities to new markets.”

India a long-term priority

Australian Grape & Wine said India will also be a long-term priority for the industry.

It was announced over the weekend that tariffs on Australian wine exports to India will be slashed following the signing of the Australia–India Economic Cooperation and Trade Agreement (AI ECTA).

The common customs tariff on wine imported to India is 150%, making it a challenging market for imported wine. However, in accordance with the AI ECTA, tariffs on Australian wine with a cost, insurance and freight (CIF) value of over US$5 per 750ml bottle will decrease to 100% upon entry into force, with a further phased reduction of 5% per year for 10 years down to 50%. Tariffs on Australian wine with a CIF value of over US$15 per 750ml bottle will decrease to 75% upon entry into force, with a further phased reduction of 5% per year for 10 years down to 25%.

“The potential of the Indian market is significant and we will undertake a range of activities to engage with Indian grape growers and winemakers, along with government officials and technical experts, to share knowledge, build relationships and grow the wine category in India,” said Mr Battaglene.

Government funding to build online price platform

The Australian grape and wine sector has also secured a $989,000 grant from the Australian Government to build an online winegrape price indicator platform that will improve market transparency and inform business decision-making.

Once developed, the platform will give winegrape growers access to timely and accurate pricing information so they can better understand the market.

A consortium comprising Australian Grape & Wine, the Inland Wine Regions Alliance and Wine Australia secured the funding through the Australian Government’s Improving Market Transparency in Perishable Agricultural Good Industries initiative, and will jointly oversee the project, with Wine Australia as the lead agency.

The government funding was announced by the Minister for Agriculture and Northern Australia David Littleproud.

Wine Australia Chief Executive Officer Dr Martin Cole said: “This grant is a huge win for the Australian grape and wine sector and a testament to the collaboration and cooperation between the members of the consortium.

“The sector is going through an incredibly challenging period, hit hard by COVID-19, labour shortages, China tariffs, global shipping issues and the annual challenges with a changing climate.

“The three organisations all have the same goal of improving efficiency, sustainability and profitability for the sector, and we’ve worked together to develop the project concept and ensure it meets the needs of our various stakeholders,” Dr Cole said.

Chairman of the Inland Wine Region Alliance (IWRA) Jim Caddy said the IWRA was pleased the Federal Government funding would help develop a mechanism to improve the sector’s ability to collect and make use of price-related information.

“The online price indicator platform will give winegrape growers better access to market information, which will enable them to make more informed business decisions,” Caddy said.

In addition to the platform, the project will establish a dataset of domestic wholesale sales figures based on collecting transactional data from wineries. This will align with the export dataset maintained by Wine Australia and allow a comprehensive picture to be provided of total Australian wine sales.

Battaglene said the project would fill a crucial gap in information currently available to the sector, and would provide wineries and growers with valuable insights into how the market is performing.

“The domestic market is by far the largest single market for Australian wine, accounting for over 40 per cent of production. Identifying trends and indicators in this market is a very important part of understanding the overall picture of supply and demand,” Battaglene said.

A third component of the project will be to facilitate the use of the price indicator data by the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) in order to publish independent winegrape price forecasts for commercial grapes.

“We will build a strategic partnership that will enable the wine sector to leverage ABARES’ considerable resources and economic expertise in the field of agricultural forecasting and obtain a broader perspective on grape pricing,” Dr Cole said.

“A significant value-add for the project will be the ongoing preparation of commercial winegrape price forecasts by ABARES as part of their normal activities.”

The project is expected to commence in July 2022 and be completed within three years.

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