Via The Australian:
The boss of the nation’s biggest family-owned winemaker Casella Wines and its global juggernaut brand Yellow Tail, John Casella, has warned that wineries with high exposure to China will find it difficult to find new markets that pay the type of premiums they could extract from the region and at such large volumes.
Speaking to The Australian from his winery in Griffith, NSW, Mr Casella also said he feared desperate winemakers carrying excess wine in their cellars and warehouses could spark a round of price wars and heavy discounting not only in Australia but in key export markets that could damage the entire industry.
With China now cut off as an export market following its imposition of a 200 per cent-plus tariff wall and other markets such as Europe and North America mired in a COVID-induced recession, the last thing the $45bn Australian wine industry needs is a panic on prices.
Mr Casella, whose business reaps almost $500m a year in sales through its hugely popular Yellow Tail brand as well as more premium labels Brand’s Laira, Peter Lehmann and Morris of Rutherglen, believes many winemakers will struggle to find new homes for the $1.3bn in wine exported to China every year.
“You can’t just redirect that volume of premium wine to other markets. All markets are well supplied, have very strong competitive tension and pressure and it is not that easy just to redirect products and sell them at the same rate that you were selling them to a major market like China,” Mr Casella said.
Chinese demand is not going to suddenly dry up by order of Xi Jinping. It will shift to other countries and brands. They will find their own supply suddenly taught and raise prices. Gaps will open in other markets as they divert product to higher paying Chinese.
Sure, there’ll be a period of discounting for Aussie producers as they move into these new market gaps but stop wining and start selling. The demand will be there.
Or, give up your freedom. It can’t be both.
