‘The market is gone’: China wine tariffs spark re-think for Rockcliffe with no plans to target it again

A Great Southern geologist-turned-winemaker who lost $250,000 overnight after China implemented crushing tariffs two years ago has welcomed bilateral discussions but is unlikely to target the market again. Rockcliffe Winery owner Steve Hall said the overnight collapse of the Chinese market came without warning when Beijing introduced “brutal” five-year tariffs of between 116 per cent and 218 per cent on wine in March last year. China had introduced interim tariffs of up to 200 per cent on Australian wine a year prior, claiming Australian winemakers had sold wine below the cost of production and had been subsidised. The move wiped nearly a billion dollars from Australia’s $40b wine industry, with sales to China falling 77 per cent to $274 million last year and more than wiping out gains in smaller markets including Singapore and South Korea. Dr Hall said the tariffs cost him $250,000 overnight — with crates of wine packed for shipping containers still sitting in his Denmark-based warehouse — and a forecast $650,000 in sales for the 2018-19 financial year alone. There was also the tens of thousands of dollars and hundreds of hours he spent investing in travels to China and researching the Chinese market before setting set up his Shanghai importing company, which is now sitting idle. Dr Hall said he felt confident entering the Chinese market — Australia’s biggest wine-buyer — in 2014 as a way to sell large volumes of luxury wine. A phased removal of tariffs on Australian wine, which started in 2015 under the China-Australia Free Trade Agreement and fell to zero in 2019 — gave Australia a 14 per cent tariff advantage compared to competitors. “The (large) tariffs were introduced brutally, without warning, and many winemakers throughout the south-west of WA have had a tough time rebuilding their businesses and diversifying their markets,” Dr Hall said. “Like many Australian winemakers, Rockcliffe was left with a huge amount of stock after contracts were broken. “From 2016 to 2017, we made large investments traveling to China to research the market; printing labels for new bottles manufactured especially for the market; and making vast quantities of wine. “In 2018-19, we were forecasting sales of $650,000 to China, representing one quarter of all sales at the time.” Australian exporters and analysts welcomed a high-profile meeting between Australia and China’s defence ministers in Singapore on Sunday — the first communication between the two countries in nearly three years Prime Minister Anthony Albanese has played down the possibility of a reset, saying any further warming of relations would depend on whether or not they agreed to remove trade sanctions and barriers on Australian exports. While the recent discussions have sparked some exporters’ hope a range of goods might be able to enter China without prohibited tariffs again some day, but Mr Hall said he wouldn’t be changing tack any time soon. Mr Hall — who has owned the Denmark-based winery for 20 years this year — said he had his sights set on the Perth market after experiencing a surge in demand across the Great Southern, driven by landlocked WA travellers. He said the past two years had been “very good” as local foodies with itchy feet explored their own State, with Mark McGowan’s COVID-19 hard border restrictions driving a huge increase in foot traffic at his winery on the coast. “After a few years getting our house into order and perfecting our craft further, we made a strategic decision to focus on Perth because it is a growing city with an increasing appetite for high-quality, luxury wine,” he said. “The past two years have been very good for cellar door sales, and it is amazing how many people who have come through that have never left Perth. “It would be a big effort to go back to China. I would be reluctant to do it, we have changed our whole business market now to focus much more on Australia... the local market is more important to us.” Dr Hall is this year celebrating his 20 year anniversary of “luxury winemaking” by launching his latest top end tier wine range of Shiraz, Chardonnay, and Cab Sauvignon, called Nautica, into the Perth market with confidence after the increase in sales in the Great Southern. He said his wine label, which sources grapes from throughout the Great Southern region, had only just recovered sales and profits after what he described as “a potentially company-breaking” foray into exporting to China. “It has been a long road, which has included some enormous challenges, but we have never been in a better position, and we are delighted to celebrate 20 years of high-quality wine making,” Dr Hall said. “From me personally, it has been hugely rewarding building a winery that has grown from strength to strength. “Now 20 years after I bought the vineyard, and thanks to our excellent team based at the winery, we are producing wine that is receiving commendations by experts such as James Halliday and WA’s own Ray Jordan. “Building the company up to its current position, is a career highlight which has given me a great deal of personal satisfaction and I’m proud of how far the wine has come.” Aside from Perth, Rockcliffe Winery has sought new markets in Japan, South Korea, Singapore and Malaysia. Dr Hall still considers the Asian region — with its massive population, burgeoning middle class and desire for affluence — an area of untapped growth. A former oil and gas geologist, Dr Hall bought the winery formerly known as Matilda’s Estate in 2002 and rebranded it Rockcliffe after the stretch of 100m high granite rock cliffs that dominate the eastern end of Denmark’s main bay. Nine people work at 4.3ha property, which also includes a gelataria and wine tasting. The winery has received many awards, including the trophy for Best WA Winery under 300 tonnes at the 2012 Royal Perth Wine Show and the 2014 Most Improved Winery Award in the WA Wine Guide 2014. Rockcliffe has received several five red star ratings in the James Halliday Wine Companion.