Australian wines expected to do magic in Indian market: CEO Wine Australia

As the ECTA comes into force, preferential tariff treatment will be afforded to premium Australian wines imported to India.

India has emerged as one of the main destinations for Australian wines. Australian wine exports to India grew by 81 per cent in value to reach $12 million and 72 per cent in volume to reach 2.5 million litres in 2021. 

This positive development in the light of the recent India-Australia trade pact gives Dr Martin Cole, CEO of Wine Australia, a lot to look forward to as far as Australia’s wine business with India is concerned. He believes the trade pact will make India a more viable proposition for small to medium winemakers from Australia who have not previously contemplated entering the Indian market. 

Dr Martin joined this apex wine body at a particularly critical time when Covid-19 had taken its toll on Australian wine exports and the country lost its biggest wine export market – China. 

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Q: What is the key focus of Wine Australia at present? 

Dr Martin: The key focus for Wine Australia currently has been diversifying and intensifying its efforts in the market and driving innovation and investment across research, development and adoption to maintain a competitive wine sector for Australia. 

Q: As the Head of Wine Australia, what is your strategy to ensure that Australian wines do well in the global market and compete with the old world wine countries?

Dr Martin: Reigniting growth through market diversification is a key priority for Wine Australia and we are supporting this through our market insights, marketing and regulatory functions. We are encouraging businesses to make use of our free resources and services, including tailored consults for those looking to explore new markets. 

We are delivering market entry programs, such as Export Ready USA, Explore Canada & Explore UK, and the US Market Entry Program, to help wine exporters from Australia look to enter these markets. 

We are also working very closely with the Australian Government to build opportunities and trade relationships in other markets. We have developed the Australian Wine CONNECT platform to help Australian wine producers connect with distributors and retailers. 

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Q: Give us a sense of the current status of Australian wines in international markets and tell us which countries are the largest buyers of Australian wines. 

Dr Martin: Global shipping issues and Covid-19 have taken their toll on our wine exports – and the loss of the China market has been a challenge. Export of Australian wines in volume declined by 17 per cent, while it declined by 29.8 per cent in value, in the year ended on December 2021 against the year ended on December 2020. 

Still, red wine is leading in all the categories of wine exports from Australia with A$1364.9M value followed by still white wine, sparkling wine, still rose wine and other wines. After China’s mainland imposed tariff restrictions on Australia, the UK emerged as a leading export destination for Australian wines, followed by the US and Hong Kong. 

India has also emerged as one of the main destinations for Australian wines as available export data for the year ended December 2021 shows. As per the data, Australia’s wine exports to India surged by 81 per cent in terms of value in the year ended in December 2021 against the year ended in December 2020. During that period the export of wines from Australia to India escalated from A$ 6.5 M to A$11.8m.

Australia’s wine export data to India reflects that sparkling wine’s export was leading in all categories of wine exports. Exports of sparkling wines from Australia to India impressively rose to 251.9 per cent in December 2021 as compared to December 2020.

The priority for us is to re-energise our traditional wine markets like the UK and the US, continue the wine education process and emphasise the innovations underway in Australian wine while exploring new opportunities. 

Q: How seriously has the Australian wine trade been affected by China’s imposition of a high anti-dumping tariff on Australian wines?  

Dr Martin: China was a $1.2 billion market for Australian wines so the impact of China’s tariffs on bottled Australian wine imports has been significant. The trick for Wine Australia is to capitalise on new opportunities for our wineries and exporters. 

Australian wine exports to India grew by 81 per cent in value to reach $ 12 million and 72 per cent in volume to 2.5 million litres in 2021. 

A couple of Asian markets are soaking up some of the higher-value red wines that would otherwise have gone to China; our wine exports to Singapore and South Korea escalated by 108 per cent and 74 per cent respectively.

In the UK, we had good news late last year with the signing of the free trade agreement between the two countries that sees the removal of a small but significant customs tariff, which places Australian wines on an equal footing in the UK; with wines from competing countries like Chile and South Africa. 

And when the AI ECTA comes into force, preferential tariff treatment will be afforded to premium Australian wines exported to India.

Q: What kind of support was extended to wineries and wine companies by the Australian government and Wine Australia in marketing and sale of their products in those difficult months? 

Dr Martin: In order to maintain a regular connection between buyers, media and the winemakers during the Covid-19 lockdowns, the Wine Australia team worked closely with the regional associations to provide virtual tastings via the CONNECT site. Typically reaching over 200 attendees live, many with sample packs of wine to taste along with the winemakers, these have proven an invaluable source of up-to-date information for the trade, and have delivered a wide range of exclusive and new vintage wines to the markets.

In terms of financial support, the Australian Government is investing $85.9 million to help Australian agri-businesses expand and diversify their export markets through the Agri-Business Expansion Initiative (ABEI). 

The Government’s Agricultural Trade and Market Access Cooperation (ATMAC) Program is expanding trade in Australia’s agricultural, forestry and fisheries sectors into emerging export markets and/or export markets with high-growth potential. This will be achieved through support for diversification efforts that align with industry priorities.

Q: What is your outlook for 2022-23? Are you looking at any significant change in the production volume & sales of wines during the current financial year?

Dr Martin: The average wine grape production in Australia over the past 5 years is around 1.8 million tonnes. This can vary by up to 20 per cent due to the normal range of seasonal conditions. Outside of that, we are not expecting any significant change in production volume in the 2022 and 2023 vintages. 

Australia exports around 60 per cent of its wine, while the other 40 per cent is sold in the domestic market. These proportions are not expected to change significantly in 2022-23, although the mix of our wine export markets has changed as a result of changes in the trading environment. 

Q: Why has wine consumption of premium Australian wines not grown significantly over the years?  

Dr Martin: The 150 per cent tariff on imported wine has been an impediment to the growth of the premium wine market in India. 

Q: India has agreed to significantly reduce custom duty on Australian premium wines.  How optimistic are you about better market access to premium Australian wines in India after this duty reduction?

Dr Martin: The signing of the Australia-India Economic Cooperation and Trade Agreement (AI ECTA) is a positive step for the wine business in our countries. There is potential for growth in the sale and consumption of Australian wines in India. 

In particular, the AI ECTA will make India a more viable proposition for small to medium winemakers from Australia who have not previously contemplated entering the Indian market. 

When the AI ECTA comes into force, preferential tariff treatment will be afforded to premium Australian wines imported to India, which currently represents a small portion of Australia’s wine exports.

Tariffs on Australian wines with a cost, insurance and freight (CIF) value of more than US$5 per 750ml bottle will decrease to 100 per cent upon coming into force of the treaty, with a further phased reduction of 5 per cent per year for 10 years down to 50 per cent. 

Tariffs on Australian wines with a CIF value of more than US$15 per 750ml bottle will decrease to 75 per cent upon coming into force of the treaty, with a further phased reduction of 5 per cent per year for 10 years down to 25 per cent.  

As an example of what could happen once the agreement comes into force, the wine that leaves Australia at an average value of A$10/litre FOB would be eligible for lower tariff benefits through the AI ECTA. 

According to estimates determined using Wine Australia’s FOB to the retail calculator, the Australian wine that currently retails at around Rs.4300 per bottle in India can expect to fall to around Rs. 3600 per bottle when the AI ECTA comes into force (a 15 per cent reduction) and to around Rs.3000 per bottle after 10 years (a 30 per cent reduction).   

Q: India’s wine importers are always looking for marketing support for building the market for new wine portfolios in the country.  Does your organisation extend financial help to the wine companies to fund their marketing expenses? 

Dr Martin: Wine Australia doesn’t have any grant or financial support available to help wine companies fund their marketing expenses. However, the Australian Government offers Export Market Development Grants (EMDG) program to help Australian businesses grow their exports in international markets. These grants encourage small to medium enterprises from Australia to market and promote their goods and services globally. 

Q: Give our readers a peek into some prominent Australian wine regions.

Dr Martin: Australia began making wines over two centuries ago. We have always made great Shiraz, Cabernet Sauvignon, Chardonnay, Riesling, Grenache and Semillon, but our passion extends to ‘alternative’ varieties such as Fiano, Grüner Veltliner, Sangiovese and Nebbiolo.

Australian wine regions are spread in Western Australia, South Australia, Queensland wine region, New South Wales, and Tasmania region.  

Western Australia’s wine history dates back to 1840 and the region has earned the reputation of being a producer of premium wines.  It comprises the Great Southern wine region and Margaret River wine region.  The producers in Western Australia grow over 36 different grape varieties that span the alphabet from A to Z or Arneis to Zinfandel.

South Australia wine region comprises Adelaide Hills Wine Region along with other regions. Adelaide Hills Wine Region is Australia’s most vibrant wine region with its distinctive premium wines, viticulture and stunning scenery. 

Coonawarra is one of South Australia’s premier red wine regions; home to the most famous vineyard soil in the world. With a winemaking history that dates back more than a century, Coonawarra is one of Australia’s oldest wine regions too. 

The Queensland wine region has a wine history dating back to 150 years. The region produces world-class wines, thanks to a bunch of dedicated and passionate producers.  

New South Wales wine region is the birthplace of Australian wine. It is a small seaside region making waves with its elegant cool-climate wines.

Located in the south of mainland Australia, the pristine island of Tasmania is a tourist hotspot that is also one of the top cool-climate wine regions down under. With nothing but ocean between Tasmania and Antarctica, the region has a cool, maritime climate. Quality-obsessed producers, there are making some of Australia’s best wines, including Pinot Noir, Chardonnay and world-class sparkling wines.

Q: Which are the top wine tourism destinations in Australia?

Dr Martin: We are fairly spoiled for choice in Australia when it comes to wine tourism experiences. The latest figures on wine tourism in Australia show that 5.5 million visitors went to wineries in Australia in the year ending September 2020; they spent $5.9 billion in Australia during their trip there and stayed for an average of six nights. 

The top 3 GI regions where Australian travellers went to a winery were Margaret River, Hunter, and Mornington Peninsula.  When it comes to international tourists, the top three wine tourism destinations in Australia were Yarra Valley, Margaret River, and Hunter Valley.

Disclaimer: This exclusive interview was done by Bishan Kumar, Editor-in-Chief of Spiritz magazine. We have published it under our global collaborative project.