Wineries SPECIAL REPORT Photo by Moritz Knöringer on Unsplash businessnews.com.au FEATURE WINERIES A lot of those “people who were going to the south of France or Italy or even Bali are staying home and travelling, or staying home and drinking - Mike Calneggia Mike Calneggia owns Calneggia Family Vineyards. Photo: David Henry Adapting to tariffs and a pandemic WA wine producers are managing the fallout from COVID-19 restrictions and China tariffs. AUSTRALIA’S wine industry lost its The company’s net profit was down red wine meant for China had to be single biggest export market in a single 23.5 per cent in its 2021 half-year sold in the local market. day in November 2020. results, which it told the ASX was due Calneggia Family Vineyards owner On November 27, the Chinese to a combination of the Chinese tariffs and director of alcoholic beverage government announced the preliminary and the COVID-19 pandemic. consultancy Langley and Co Advisory, findings of an anti-dumping In late March 2021, the Chinese Mike Calneggia, said he was nervous investigation into Australian wine. government completed its about the possibility. The news wasn’t good for Australian anti-dumping investigation and “If a lot of that wine comes Madeleine Stephens [email protected] producers. confirmed that tariffs on some back into the market, then it does The investigation claimed to have Australian wine imports, ranging from impact red wine pricing across the found examples of dumping, and 116.2 to 218.4 per cent, would remain board and that has the potential substantial harm to Chinese producers for five years. to impact WA producers, so that’s as a result. Despite this challenge, Australia’s been a challenge,” Mr Calneggia told China imposed tariffs on Australian exports to other markets have grown. Business News. wine exports ranging from 107 to 200 Wine Australia reported significant “It’s an unknown challenge at the per cent. growth in exports in the year to March moment because there are such long The market, worth $1.2 billion to 2021, with exports to Europe up 23 per lead times in wine, and obviously a Australia for the year to September 2020, cent to $710 million, and sales to North lot of wine got shipped into China lost almost all its value overnight. America up 5 per cent to $628 million. before the tariff was applied.” ASX-listed Treasury Wine Estates, Fortunately for most producers in In the meantime, new opportunities owner of Margaret River-based Devil’s Western Australia, while 25 per cent are emerging. Lair and Fifth Leg brands (the third of Australian wine is sold in China, Mr Calneggia said New Zealand largest producer on Business News’s Data that figure falls to 4 per cent for WA producers which typically sold into & Insights), was hit hard by the tariffs, wine, according to Wines of Western the Australian market had found with its share price falling 11 per cent. Australia chief executive Larry more lucrative opportunities for their Treasury Wine Estates produces Jorgensen. semillon sauvignon blanc, leaving premium red wine, including Penfolds, Mr Jorgensen said the challenge for a gap in the local market for WA which is popular in China. WA producers could come if premium producers to fill. 22 | Business News May 3, 2021 May 3, 2021 Business News | 23 PB | Business News May 3, 2021 May 3, 2021 Business News | PB FEATURE FEATURE WINERIES WINERIES Pandemic impacts COVID-19 lockdowns and restrictions have also affected sales, although A lot of those most wineries spoken to by Business News said the extent of the impact was people“ who were dependent on the split between retail and on-premises sales. going to the south Calneggia, with a strong retail presence, had a good financial year in of France or Italy or 2020 and was on track for a reasonably even Bali are staying good 2021, Mr Calneggia said. “A lot of those people who were home and travelling, going overseas to the south of France or Italy or even Bali are staying home or staying home and and travelling, or staying home and drinking,” he said. drinking - Mike Calneggia “We are getting the benefit of that.” Sandalford Wines chief executive Grant Brinklow said the closure of international borders had an immediate impact, particularly given the winery had invested time and energy becoming ‘China-ready’ to host Chinese tourists at Mike Calneggia owns its cellar door and restaurant. Calneggia Family Vineyards. “In the nine months to the end of Photo: David Henry March [2020], we had over 180,000 paying guests of some type through the estate,” Mr Brinklow said. “I would expect that, for the period Grant Brinklow’s Sandalford is investing in its Swan Valley venue. Photo: David Henry we have reopened, starting with the functions through to June this year … we will probably get 125,000, and they With just under 1,000 hectares of groups of people to provide labour on a property about a 10-minute drive are all Perth people.” vines in the Swan Valley, Mr Brinklow in future years if the international away,” Mr James said. Adapting to tariffs and a pandemic Online direct-to-consumer sales was a said about 75 per cent of those were for borders didn’t open, including grey “People want to come to Margaret growth area for the business, up 250 per table grapes. nomads or university students. River, it’s a beautiful location and cent from April to November last year. “The reality is there’s a dozen or so Skilled winemakers who usually it’s paradise down here; they want to WA wine producers are managing the fallout from COVID-19 To make its offering more appealing wine producers out here, so there’s flew into WA to work in production come here and want to work, but you to Western Australians and encourage less competition,” he said. were also unable to enter the country, can’t come here if you’ve got nowhere restrictions and China tariffs. more local visitation, Sandalford used “There are fewer places for people to putting existing workers under to live.” the downtime in 2020 to expand its visit, that’s the big difference.” pressure. He said the season had been Swan Valley venue. “In the winery itself, there challenging, with variable weather, AUSTRALIA’S wine industry lost its The company’s net profit was down red wine meant for China had to be The winery, ranked as the seventh Labour was typically a program of flying but the end result was positive. single biggest export market in a single 23.5 per cent in its 2021 half-year sold in the local market. largest on Data & Insights, spent $3.5 One of the biggest challenges for winemakers who would come in and “Weather wise, it was certainly an up day in November 2020. results, which it told the ASX was due Calneggia Family Vineyards owner million renovating its restaurant, vineyards over the past year has been take up extra positions in production, and down 12 months,” Mr James said. On November 27, the Chinese to a combination of the Chinese tariffs and director of alcoholic beverage cellar door, grounds and building a the availability of workers. in processing, because the workload “Despite all the hot, cold, dry, wet, government announced the preliminary and the COVID-19 pandemic. consultancy Langley and Co Advisory, playground. Cellar doors and hospitality venues around vintage quadruples,” Mr the ups and downs, the harvest period findings of an anti-dumping In late March 2021, the Chinese Mike Calneggia, said he was nervous The restaurant has transitioned from were first to feel the pinch, unable to Jorgensen said. ended up pretty well bang on normal, investigation into Australian wine. government completed its about the possibility. seating 100 to 250 people, and is now find front-of-house staff and chefs. “People have been able to find the actual picking dates. The news wasn’t good for Australian anti-dumping investigation and “If a lot of that wine comes serving a slightly more relaxed menu, Mr Brinklow said it had been locals, to a degree, to do that but I “One of those years, if you get it Madeleine Stephens [email protected] producers. confirmed that tariffs on some back into the market, then it does which is less focused on high-end difficult to staff Sandalford’s new think what’s also happening is the right in the vineyard, you made pretty The investigation claimed to have Australian wine imports, ranging from impact red wine pricing across the dining. venue, as there were plenty of permanent workforce has taken on a nice wines out of the 2021 vintage.” found examples of dumping, and 116.2 to 218.4 per cent, would remain board and that has the potential “From a business point of view, it hospitality venues advertising for greater role and worked a lot harder Annual production data sourced substantial harm to Chinese producers for five years. to impact WA producers, so that’s makes sense to invest in this site and employees. this year. by Business News and used to rank as a result. Despite this challenge, Australia’s been a challenge,” Mr Calneggia told the canvas that we have here,” Mr When it came time to harvest, “That’s all well and good, but I don’t wineries shows most produced China imposed tariffs on Australian exports to other markets have grown. Business News. Brinklow said. vineyards found it difficult to think it’s sustainable over a number of around the same as last year, with few wine exports ranging from 107 to 200 Wine Australia reported significant “It’s an unknown challenge at the “Yes, there’s vineyard but there is find people to handpick fruit, years.” changes.