Direct wine-to-consumer business Naked Wines announced a $5 million rescue fund – Stop the Squeeze – to support quality Australian independent winemakers affected by China’s wine tariffs.
Naked Wines Australia managing director Alicia Kennedy said roughly 15 per cent of its local independent winemakers, plus a much larger ecosystem of growers, bottlers, employees and community, would be affected by the tariff hikes, with Australia’s independent winemakers likely to be the most impacted yet least resourced to manage the impacts.
Kennedy said: “Australia’s independent winemakers have been caught between a rock and a hard place with the sudden tariff hikes of up to 212 per cent on top of an already tough year. The reality is that winemakers reliant on traditional channels are going to suffer the most over the next 12 to 18 months.
“For the smaller winemakers and grape growers, there’s a lot of fear and uncertainty around their future; they have committed to vintage and invested upfront, and they’re understandably very concerned they’ll be driven to the wall by retailers dropping or bartering down their contracts to take advantage of cheaper sources. Unfortunately for some, this is already happening.”
West Australian Byron & Harold Wines co-founder and chair of The Drinks Association Ralph Dunning said the impact of China’s decision has been immediate. He said: “After investing eight years travelling to China at least four times per year to educate and build strong relationships with quality-focused local wine professionals, we now have a situation where our wines are subject to a 212 per cent duty and therefore are not viable, price wise, in the market.
“This has been devastating for a small, quality-driven wine enterprise that is self-funded.
“Practically overnight, we have lost at least 50 per cent of our turnover. We have growers, whose fabulous fruit we have purchased annually, that will need to be prioritised and rationalised. We have suppliers of dry goods like bottles, cartons, capsules and labels that will experience a huge downturn in their businesses as we try to re-balance our business.
“Most importantly, we have employees - who are our friends and their families - that we’ll now need to have awful discussions with around their working hours, or whether or not we can even afford to continue employing them.”
For Kennedy the concern is the deflationary pressure on wine and grape prices. She said: “There is a very real danger that many local winemakers will become collateral damage in this situation and be left without a leg to stand on. As an industry and as a nation, we need to band together now to ‘Stop the Squeeze’ on Australia’s wonderful community of independent winemakers - a large portion of whom exist in heartland regional Australia.”
2020 Barossa Winemaker of the Year and head winemaker at Soul Growers Stuart Bourne said the business had already had several orders cancelled. “The true extent of the impacts will become more apparent in the coming weeks, but we are not hearing of any long-term solutions at the moment.
“The most disappointing part is the prospect that all the years we’ve worked to develop long-term business relationships will go to waste – and that we’re now without plans for the future. The tariffs have already had serious impacts, but the potential long-term effects look much more severe.
“It will take significant time, work and resilience to bounce back – but it’s unfortunately out of our control. We need support from the industry and Aussie wine customers to get through this.”
Stop the Squeeze makes three commitments:
Certainty for winemakers: A public pledge to honour commitments made to all of its independent Australian winemakers. Naked Wines Australia will not drop contracts with its winemakers and their growers to take advantage of cheaper sources.
Fair prices for all: A public pledge to continue its commitment to delivering fair prices to winemakers and customers so that everybody wins.
A $5 million rescue fund: To support talented Australian independent winemakers feeling the grip of the recent tariff hike. This fund will offer its winemakers a new home to sell their best wines at a fair price, with direct connection to Naked Wines’ network of more than 100,000 local and over 750,000 global customers.
Winemakers can apply to the fund and must meet the following criteria to be considered:
1. be an independent wine producer or winemaker;
2. display a proven track record of quality;
3. show evidence of the impact China’s wine tariffs have had; and
4. clear any importer/agent exclusivity arrangements first.
