Trade war fallout: China finds new bestie in SA wines

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Tension between Australia and China over key commodities, including beef, cotton and wine, could have South African farmers smiling all the way to the bank.

This is the view of Johan Reyneke, a Western Cape organic wine farmer, who experiences the commodities trade war as an opportunity to grow his business. Although he has only been exporting to China for the last two years, he sees a “good gap” in the raft of trade measures imposed by China on Australian exports.

Johan Reyneke is a Stellenbosch-based pioneer of organic and biodynamic winemaking. Photo: Supplied/Food For Mzansi

Reyneke, a pioneer of organic and biodynamic winemaking, tells Food For Mzansi, “In Afrikaans we say, ‘Die een se dood is die ander se brood.’ This means one man’s loss is another man’s gain.”

Before Mzansi’s wine exports to China increased by a whopping 50% last year, Reyneke only exported a few hundred cases of wine to the Chinese market. Last year’s increase was a direct result of the mounting tensions between China and Australia.

This saw China slapping import tariffs of between 107% and 212% on Australian wines. China’s relationship with Australia originally soured in 2018 when it became the first country to publicly ban China’s Huawei from its 5G network.

A bloody billion-dollar blow

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While this might have been a great blow to Australia, Reyneke believes his wine sales to China will now grow considerably.

“This impacts on my business significantly for two reasons. One is obviously because more sales are always a good thing. But what we also find is that the Chinese market is happy to pay for premium products or aspirational products to a greater extent.

“So, we find that some of our expensive wines perform very well in the Chinese market,” he reveals.

ALSO READ: How Reyneke built up his pioneering organic winery

For many years, the Chinese snubbed Mzansi’s premium wines, but Reyneke believes this has changed after glowing reviews from international media.

“The Chinese market is closely following a lot of the international journalists and South Africa’s wine regions have been receiving a lot of positive press from journalist all over the world. So, a lot of Chinese buyers have picked up on it, which is also good for brand South Africa.

“Back in the day there was a lot of cheap South African wine being exported to certain markets. That created a stereotype that our wine was cheap and cheerful,” he says.

WOSA on growing demand from China

Wines of South Africa communications manager Maryna Calow. Photo: Supplied/Food For Mzansi

Maryna Calow, communications manager at Wines of South Africa (WOSA), agrees that the trade war between China and Australia has created a great opportunity for South Africa’s wine industry.

“One person’s loss is another person’s gain. This has come as a direct result of the situation between the Chinese and the Australian government.

“So, this has created an opportunity for our country that we are, of course, grateful for. I think this is really opening up doors for South African producers to export into that market.”

Calow says in the last few months many Chinese importers who have traditionally imported Australian wines have instead contacted WOSA as well as local producers.

“We see it as a positive and a great opportunity, and we are certainly going to do whatever we can to continue to promote South African wine in China. We will also harness this opportunity that we have been given to really position South African wine as a viable option.”

In 2019, South Africa only captured 0.9% of the Chinese wine market share, a tiny share when compared to Australia (35.4%), France and Monaco (28.7%), and Chile (14.2%).

Tariffs imposed on Australia reportedly resulted in a 95% decline in Australian wine exports to China in December 2020 compared to the same period in 2019.

ALSO READ: ‘Let’s grow agricultural exports to India and China’

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