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Coca-Cola Australia is gearing up for arguably its most challenging new product launch in years as it makes its first foray into alcoholic beverages in the middle of a pandemic.

Coca-Cola Australia, the marketing arm of The Coca-Cola Co, will next week launch Topo Chico, an alcoholic hard seltzer based on the top-selling Topo Chico mineral water brand, which has been bottled in Mexico for 126 years.

The Coca-Cola Company bought Topo Chico for $US220 million in 2017 and launched an alcoholic version of the beverage in Latin America in 2020 and in North America earlier this year amid a boom in sales of hard seltzers.

Coca-Cola Australia vice-president Rob Priest said lockdowns in NSW, Victoria and the ACT, restrictions on mobility, the lack of foot traffic in stores and the closure of hotels, clubs and bars would make the launch of an alcoholic beverage challenging.

“We see products like Topo Chico as something that is shared in a social environment and ... those social environments of sharing and entertaining just don’t exist at this point in time,” he said.

“But the rest of the market [outside NSW, Victoria and the ACT] is performing as normal.”

Coca-Cola planned to harness social media and outdoor advertising to promote the Topo Chico brand and work with its retail partners, Endeavour Group’s Dan Murphy’s and BWS chains to introduce consumers to the new beverage.

The launch would gather pace in late October, by which time Mr Priest hoped lockdowns would have lifted and licensed venues would have reopened.

“We’re mildly confident that’s about the right timing for an Australian launch,” he said.

“Summer is the perfect time, as it’s refreshing and easy to drink. They’re not like alco-pops, that are sweet and sugary, they’re lower calorie and very sophisticated, and the perfect summer drinks.”

Coca-Cola’s expansion into alcohol puts paid to the long-held theory that the world’s largest beverage company was against alcoholic drinks.

Under The Coca-Cola Co chief executive James Quincey, who took the helm in 2017, the beverage giant has been developing a more diverse portfolio of brands that respond to different consumer expectations and needs.

Overseas, The Coca-Cola Company has launched new products including Honest Cold Brew tea and cold brew coffee, Simply Smoothies, and Coca-Cola Energy.

Three years ago, it launched Lemon-dou (Demon Lemon), a sour lemon-flavoured hard seltzer in Japan and is considering launching the brand in the US and possibly Australia.

“The position has changed and as a company we’re looking for opportunities to grow,” Mr Priest said.

“As we look at categories to enter we’ve seen the alcohol category, especially in hard seltzer, an area we’d like to play in, and we think we have a right to play in based on what we’re good at, which is making drinks that are tasty and delicious.”

Hard seltzer has been enjoying a wave of popularity in Australia and overseas as drinks such as White Claw catch on with consumers seeking less alcohol and lower calories.

Last year, Lion Dairy & Drinks snared the Australian rights to the White Claw brand, which pioneered the hard seltzer segment in the US and built it into a $2.5 billion category based on perceptions it is a “healthy alcohol” with lower calories and lower sugar.

• Former Shoes of Prey CEO Michael Fox has started meat-alternative company Fable Food.
• Rather than trying to replicate meat, Fable seeks to create “meaty-tasting” food out of mushrooms.
• Receiving the endorsement of Heston Blumenthal, Fox co-founded the business with mushroom scientist Jim Fuller and mushroom farmer Chris McLoghlin.

Combining degrees in chemical engineering with kudos from one of the world’s most recognisable chefs, Fable is forging its own path in the booming plant-based market.

Headed by entrepreneur Michael Fox, the company is striving to put mushrooms back on the map with food that fits in as easily at a fancy restaurant as it does served at a fast-food chain.

Just don’t call it fake meat.

“We’re not trying to replicate meat. We don’t want to make it bleed,” Fox told Business Insider Australia. “What we are trying to make is really meaty-tasting food out of mushrooms. Minimally processed, whole foods, delicious.”

While Fox added it is great that there are so many companies catering for different tastes, it is a point of difference for Fable in an increasingly crowded market.

One of those competitors, curiously enough, is Beyond Meat, which in many ways pioneered the kind of burger that seeks to mimic the look and taste of a conventional meat patty. It’s perhaps funny, then, that Fable has landed its mushroom products alongside Beyond as it joins in a new partnership with burger chain Grill’d.

Coming in as an addition to Beyond’s lineup rather than a replacement is a sign that Fable is doing something different.

Another is that celebrity chef Heston Blumenthal was not only the brand’s first customer, but has become its loudest supporter. Fable’s products are used in Blumenthal’s Michelin-starred restaurants around the world, while households can pick them up from their local supermarket.

Fine funghi

If Blumenthal has, in a sense, become the face of Fable, Jim Fuller is the brains.

Growing up in Texas, Fuller has the kind of CV that Fox could only dream of in a business partner.

Armed with degrees in chemical engineering and agricultural science, Fuller worked as a mycologist — or mushroom scientist — for a decade before teaming up to co-found Fable.

“I don’t know of anyone else who is both a qualified chef and mushroom scientist, and yet Jim has both skillsets in one human being,” Fox said.

Fuller, unsurprisingly, runs the company’s research and development, extending a journey both he and Fox have been on for years since turning vegan.

“Jim had been experimenting with food for years before I met him, trying to find something meaty to tide him over.

“That’s that’s very much who we’re going after, their kind of meat eater or the flexitarian, who wants to reduce their meat consumption but that still might eat it.”

Fuller is joined by co-founder Chris McLoghlin, an entrepreneur turned farmer who started the country’s largest organic mushroom farm.

From prey to produce

Finally, Fox ties in as the entrepreneur behind the business.

When his footwear empire, Shoes of Prey collapsed in 2019, it surprised many. The business, which at one point claimed it was on track to crack $100 million in annual revenue, was considered one of the country’s real startup success stories. Then it abruptly fell over, costing investors millions and forcing the business to let go of 200 employees.

Taking a sojourn to Europe with his Danish wife and two young children, Fox says he needed a break and began studying areas that interested him.

“One of those was industrial animal agriculture and I got really passionate about wanting to contribute to ending it,” he said. “I knew I wasn’t cut out to be an activist because I have always struggled to convince anyone to give up meat.”

Returning to Australia, he wanted to get involved in the burgeoning industry but couldn’t find an in.

“I came back and just thought I’d get a job with an existing meat alternative company. But this was kind of three years ago and everyone was just a brand new startup with, like, one or two people,” he said.

“I talked to them all and no one was hiring a washed-up entrepreneur. Maybe if I’d been a chef or a food scientist, or something like that, there might have been roles, but there was nothing for me.

“I didn’t want to start another business but I realised I’d have to if I wanted to get involved.”

A mushrooming market

It turned out to be the right decision. Earlier this month, Fable raised $6.5 million in a seed funding led by Blackbird Ventures.

One and a half years in, it has managed to sign deals with Woolworths and Coles, home delivery services Marley Spoon and Dinnerly, and is now in Grill’d stores around the country.

It has poached the general manager of Australian unicorn SafetyCulture Dan Joyce as its new head of growth, in charge of expanding its fledgling presence in the United Kingdom, the United States and Asia.

As it goes global, Fable will start knocking up against even more competition, including homegrown company v2food, trying to corner the fast-growing Chinese market.

But a competitive marketplace is exactly what the world needs, according to Fox.

“We know we can make these really delicious meat alternatives and, at scale, we know they are going to be orders of magnitude cheaper.

“Once the product tastes better than meat and is cheaper than meat, there’s really no reason to eat meat from animals anymore. So, this shift is going to happen, no matter what — we’re just working to try to make it happen faster.”

Independent retailers supplied by wholesaler Metcash appear to be taking market share from industry giants Coles, Woolworths, Endeavour Group and Bunnings as consumers continue to shop locally at neighbourhood stores for food, liquor and hardware.

Sales across Metcash’s three business pillars in May to August 2021 remained well above those pre-pandemic and, in the case of liquor and hardware, were higher than those in the same period a year ago, indicating that independent retailers have retained most of the new customers they won during the COVID-19 crisis.

Metcash has been a major beneficiary of the pandemic, gaining share as shoppers eschewed large shopping centres and CBD stores and flocked to their local IGA supermarkets and Cellarbrations, IGA Liquor and Porters stores and undertook DIY projects on their homes.

Metcash chief executive Jeff Adams said consumers continued shopping at local neighbourhood stores, consuming more food and liquor at home and, in the absence of international travel, investing in their homes.

“All those factors we have been talking about for a year and a half now, of that shifting consumer behaviour, looks like it is sticking,” Mr Adams told The Australian Financial Review after an annual meeting trading update.

“The overall network continues to trade very well, and we still see those same factors at play,” he said.

“As far as our core supermarket business, liquor business and hardware business, we didn’t see a big change [when we were] in or out of lockdown in those businesses.

“I can’t predict the future, but I can’t see a whole lot of reasons why things would change prior to international borders opening up and people being able to travel more frequently,” he said.

Supermarket sales during the four-month period were 1.8 per cent lower than those a year ago - when pantry stuffing and panic buying led to record sales growth across the sector and consumers started favouring local grocery stores over large supermarkets in shopping centres - but 12.9 per cent higher than those two years ago. Metcash’s financial year ends in April.

Excluding the impact of the loss of Metcash’s agreement to supply independent retailer Drakes, supermarket sales were 17.2 per cent higher than those before the pandemic.

Total food sales for the four months to August 15 were 7.4 per cent lower than in the year-ago period, but 3.1 per cent higher compared with two years ago, and up 16 per cent excluding the impact of the loss of the Drakes and 7-Eleven supply contracts.

In comparison, Coles’ supermarket sales rose 1 per cent in July and August and were up 12 per cent on a two-year headline basis, while Woolworths’ Australian food sales rose 4.5 per cent in July and August despite cycling 11.9 per cent growth in the previous year.

In Metcash’s liquor distribution business, total sales were 9.5 per cent higher than those in the same period last year and 23.1 per cent higher than those pre-pandemic.

Sales to Metcash’s retail liquor store customers were 1.4 per cent higher than those last year and up 24 per cent in two years, reflecting increased at-home consumption.

Trading restrictions

Sales to on-premise customers, which were hit by mandated closures in 2020, continued to recover before new trading restrictions were imposed in NSW, Victoria and the ACT in mid-July and in New Zealand earlier this month.

Metcash’s retailers appear to be faring better than Dan Murphy’s owner Endeavour Group, where retail liquor sales slipped 1.7 per cent in July and August, compared with the year-earlier period, but were 21.5 per cent higher than those two years ago.

Hardware sales also continued to boom at Metcash’s Mitre 10 and Home Timber &Hardware stores amid strong home building and renovation activity, although DIY activity has softened since the peak last year.

Total sales were 16.3 per cent higher than those in May to August last year and 37.8 per cent more than those two years ago.

Sales at Mitre 10 and Home Timber & Hardware (excluding trade hardware chain Total Tools) were 3.6 per cent higher than those in the same period last year. Both DIY and trade sales remained elevated, and were 22.7 per cent above those two years ago.

In comparison, Bunnings sales have fallen 4.7 per cent over the past seven weeks, with solid growth from trade customers offset by a decline in consumer sales. The home improvement giant has closed all its stores in Greater Sydney except for trade customers and click and collect.

Jarden analyst Ben Gilbert, who expects earnings per share to grow about 10 per cent this year, said the AGM trading update was 2 to 3 per cent ahead of expectations and was likely to lead to upgrades to full-year forecasts.

Woolworths is finding new ways to get its groceries to customers as Covid-19 lockdowns keep many Australians indoors, and has partnered with Uber to bring same-hour-grocery-delivery to Sydney and Melbourne later this month.

The offer will expand across the eastern seaboard after its initial launch on August 30, and will be available through the business’ Metro stores nationwide by early next year.

The service will initially be available from the Balaclava, Hadfield and Hawthorn stores in Melbourne, and the Bondi, Maroubra Beach, Padstow, Erskineville, Pyrmont, Randwick, Redfern, Rose Bay, and Rozelle stores in Sydney.

Orders will be picked and packed by Woolworths’ workers, before being handed off to Uber Eats delivery staff.

The idea isn’t to have Uber drivers deliver customers a full grocery shop, said Woolies Metro general manager Justin Nolan, but to bring a smaller ‘top-up’ shop to your door, and will complement the business’ bigger e-commerce offering.

“Importantly, it will also help us meet the needs of customers seeking to limit their community outings during the pandemic,” Nolan said.

Uber Eats regional general manager of retail ANZ Lucas Groeneveld said home delivery has soared in demand throughout the Covid-19 pandemic, and as lockdowns continue the demand is likely to stay high.

The broader initiative follows a trial partnership with Uber in 2020.

Woolworths is by no means the first supermarket to partner with Uber Eats, with IGA and convenience centres such as BP also available for similar shops, and Coles having partnered in 2019.

Household chemicals and cleaning products maker Pental is to acquire Melbourne-based online gifting specialist, Hampers with Bite (HWB) for $28.3 million, after a capital raising round. 

Expected to be settled next month, the acquisition will be paid for through a mix of cash and equity to be issued to the vendors. To fund the deal, Pental is raising $6 million in capital and an additional $2 million through a share purchase plan to existing shareholders. 

“Our acquisition of HWB will transform Pental by boosting our financial scale and delivering new capabilities which are highly complementary to our existing business,” said Charlie McLeish, MD at Pental. 

Hampers with Bite runs both a B2B and B2C model, offering gifts and food & wine hampers to its customers through a combination of own-brand and high-margin third-party brands and products. 

“The HWB business will boost our group revenue by approximately 20 per cent and immediately strengthen the company’s profitability.”

Pental estimates its post-acquisition combined gross profit margin to increase to 32 per cent as a result of the deal. 

“Joining the Pental group is in line with our strategy to grow our addressable market, deepen our customer relationships and expand our product offerings with a strong platform for growth,” said Rory Boyle, co-founding director of Hampers with Bite. 

Send, a six-month old start-up with the ambitious aim of becoming an entirely online inner-city supermarket chain, has raised $3.1 million in a seed funding round as it looks to launch in ideal lockdown conditions.

With potential customers stuck at home due to the COVID-19 lockdowns, Send founder Rob Adams is betting that consumers will be eager to further embrace the convenience of online shopping. It promises to get grocery items into the hands of inner-city Australians within 15 minutes of placing an order through a mobile app.

Its funding round was backed by German fund Cherry Ventures and New York-based FJ Lab, and it is hoping to imitate the success of Gorillas, a European start-up juggernaut that has achieved a valuation of more than $1 billion in 14 months.

Gopuff, which was founded in the United States in 2013, is another player looking to expand its reach with the recent acquisition of British start-up Dija.

Mr Adams said his business model was in the early phase of market testing, and involved opening up local fulfillment centres by leasing warehouses and stocking them with wholesale grocery goods. It then pays drivers and riders an hourly rate, rather than a commission such as Uber and Deliveroo, and promises to provide speedier service than supermarkets like Coles and Woolworths.

Lockdowns in Sydney and Melbourne have delivered another sales spike for gourmet food producer Maggie Beer Holdings in recent weeks as frustrated households treat themselves with higher-end products delivered online.

Chief executive Chantale Millard said the business, which sells a range of cheese, pate, fruit pastes, soup and cooking stock, had already been generating strong momentum but the renewed lockdowns in Australia’s two biggest cities had supercharged that.

“We were already seeing some good sales before lockdowns. We are definitely seeing a significant spike in the last couple of weeks,” she said.

Shareholders in Maggie Beer Holdings on May 20 approved the $40 million acquisition of online business Hampers & Gifts, in a move designed to give more online grunt to Maggie Beer’s food brands and to bring a specialist online business into the stable. Hampers & Gifts was acquired from owners Emily McWaters and David Morgan.

The acquisition was paid for through $20 million in cash and the issue of $20 million of shares at 35¢ each. Ms Millard said the Hampers & Gifts business was delivering strong sales, which were up 36 per cent in July compared with the same month a year earlier.

Maggie Beer Holdings shares were up 4.8 per cent by mid-afternoon on Thursday, to 43¢.

The e-commerce arm of Maggie Beer Holdings has been shifted from the Barossa Valley in South Australia to the Hampers & Gifts headquarters in Sydney. “It’s been quite seamless,” Ms Millard said.

She said 10 of the Maggie Beer products, including fruit pastes, sauces and caramels, would go into the hampers from September ahead of the traditional peak season for gifts and hampers.

Maggie Beer Holdings made a net profit after tax of $1.9 million in 2020-21, compared with a loss of $14.8 million a year ago when write-downs on the organic dairy products business Paris Creek hurt the bottom line. Sales were up 19 per cent to $52.9 million. Ms Millard said the company was forecasting overall sales of $100 million in 2021-22.

Maggie Beer’s online cooking series, Cooking with Maggie, in which she uses her kitchen to demonstrate simple meals for home cooks has been very popular during the pandemic.

The gourmet foods business was rebadged as Maggie Beer Holdings from Longtable last year to better harness the star power of the celebrity chef.

Ms Beer and her husband, Colin, sold the remaining 52 per cent stake in their gourmet foods business to Longtable in a deal that settled in 2019.

The initial 48 per cent of Maggie Beer Products was acquired by Longtable in 2016 for $15 million. The Maggie Beer business was established in the late 1970s at a small shop beside her Pheasant Farm restaurant in the Barossa Valley.

She became a regular guest judge on Channel 10 cooking show MasterChef, has written several cookbooks and is a campaigner for improving nutrition and quality of meals in Australia’s aged care homes.

Australian food franchise Donut King has launched a mobile business, delivering donuts to consumers’ doors.

In an interview with our sister title Inside Franchise Business, GM partner development at Donut King, Kellie Cranch said the company had been trialling the vans in different regions in Australia using existing franchise partners to measure demand. 

“Based on the results from these trials, we are excited to move forward and offer Donut King mobile to the market.”

The company aims to sign up more than 30 van-operating partners within the next year and anticipates that as well as attracting new franchise partners to the brand, the vans may be a way existing franchisees can complement their existing Donut King store business. 

“We are also expecting a lot of new interest, from people who want to be out on the road, being in charge of their own destiny,” said Cranch.

Mobile customers during trials were typically from industrial areas, sporting groups, schools and corporate offices.

“Donuts are the biggest staple of the Donut King business. By adding the DK product range to our vans, it enables our franchisees to tap into the equity of the brand and offer for sale products not commonly found on a coffee van,” said Cranch.

With lockdowns impacting many of Australia’s urban communities at present, Donut King is looking at various options to facilitate training during the Covid crisis.

“In an ideal world, we would like the new Donut King franchisees to train in our new training facility at Miami on the Gold Coast. If the franchisee lives in an area where travel is restricted, we will find an alternative way to train them close to their home.”

• v2food has closed a series B funding round worth $72 million and valuing the company at $500 million.
• Having just launched into the Chinese market, the plant-based protein company will use the funds to continue expanding overseas and developing new products.
• The company has 18 projects underway with the CSIRO, having recently released its version of pork mince, dumplings and pork buns.

Armed with an almighty war chest, plant-based protein company v2food is going to Asia.

The company, born from of a marriage between CSIRO and deep tech group Main Sequence Ventures, has just closed out a $72 million series B funding round and is setting its sights firmly north.

With the new capital injection led by European venture fund Astanor, v2 is now worth $500 million, up from just $2 million at the beginning of 2019.

Now it is taking on one of the largest and fastest-growing markets and meat consumers in the world, China.

“It has the opportunity to make a significant positive impact on the future of our planet,” CEO Nick Hazell told Business Insider Australia.

Describing it as a “key growth market” for the business, the opportunity in China is immense.

Scoffing down more than a quarter of the world’s meat, and half of its pork, a rapidly expanding middle-class has enjoyed the expanding waistlines that go along with it.

But so too are tastes rapidly changing, as the country becomes increasingly health-conscious and tucks into meat alternatives. So much so that the same diners are expected to spend almost $US15 billion on plant-based alternatives by 2025, according to some of the most ambitious projections.

Not that it’s an easy market to conquer. Hazell says the Chinese are “particularly demanding” in their culinary tastes. v2food has a secret weapon though, in order to nab its own slice of the pie.

“While [beef mince is our] core product in western markets, we have specifically designed [pork] for the Chinese palate, working with Chinese chefs to ensure a great tasting and highly nutritious pork product that is versatile and can easily replace pork meat in a range of local Chinese dishes,” Hazell said.

“In the future, more plant-based meat categories will be introduced to cater to different cuisines in China and a range of products will soon be produced locally in China too, including v2dumplings [and] v2steamed buns.”

They won’t be the only new dishes on the menu. Hazell says his team is working with the CSIRO on 18 different projects at the moment, “spanning nutrition, protein extraction technology, plant breeding technologies, soil carbon sequestration work, as well as a lot of flavour work and structure work to create ever more delicious protein.”

While China and Australia remain two key focuses for the business, v2 could also leverage off its first European investor Astanor to enter the EU.

With the potential to cut carbon emissions from the agricultural industry and produce genuine meat alternatives, Astanor Ventures partner Hendrik Van Asbroek said the Australian company was set to make waves on the global stage.

“The v1 versions of alternative meat have created awareness and demand, now we have to step up and supply the customers with healthy, delicious and price competitive products. v2food, with its world-class team and scientific expertise, is the right company to deliver this new generation of alternative meat across the globe.”

• China put import tariffs on Australian wine last year as part of a developing trade war, accusing the industry of dumping cheap product into the local market.
• The Australian Bureau of Agricultural and Resource Statistics (ABARES) predicted this would lead to a $480 million loss in production by 2025.
• Now, local producers are looking towards fresh opportunities in the UK, south-east Asia and with the developing middle class in India.

When Mark and Melissa Brown began exporting Gemtree’s ultra-premium certified organic Australian wine to China in 2016, the results were spectacular.

Australia had signed its free trade agreement with China in 2015 and the couple leapt at the opportunity the following year, hiring a team of Chinese-speaking professionals, getting certified and travelling the country extensively to understand the places they were selling to.

“The growth we saw was absolutely extraordinary,” Brown told Business Insider Australia. “I think of it as the ‘China wave’.” 

“The appetite from the Chinese perspective to do business with Australia, in Australia, with a fully authentic brand that also had third-party endorsement from wine writers and so on.”

Five years on, things have changed dramatically. Geopolitics has put Australian-Chinese relations on ice, and export industries like barley, lobster and wine are bearing the brunt of a new trade war.

“China was a once in a lifetime opportunity. It will never happen again at that scale, ever,” Brown said.

Now the question – who will drink their wine now? – is being asked by the entire industry in the wake of the Chinese government’s decision last year to slap import tariffs on Australian wine, turning off the tap on a $480 million trade.

The dispute hinges on allegations by the Chinese government that Australia had been dumping cheap wine into the local market.

In the wake of that decision, the value of wine exports to China have fallen to just $14 million in the six months ending June, leading to a 10% decline in wine exports during 2020-21 to $2.56 billion.

According to recent modelling released by the Australian Bureau of Agricultural and Resource Statistics (ABARES), when China imposed tariffs of up to 218.4% in March 2014, the impact was immediate and likely to be felt through to 2025.

As of 2019, 6,251 grape growers supplied an estimated 2,468 wineries across Australia, a third of which exported to China. By 2025, ABARES predicted a $480 million loss in production.

“I think that’s accurate,” Australia Grape And Wine CEO Tony Battaglene said. “China was prepared to pay big money for quality wine. It was our highest price market in the world.”

“At those [tariff] rates the bottled wine market has essentially closed.”

Australia has since responded by taking steps to raise a dispute with the World Trade Organisation in July, but with it likely to be years before a resolution, the development spells an end to the sector’s fairy tale run.

Why China loved Australian wine

In the years following the China-Australia Free Trade Agreement, a complex series of relationships blossomed between the two countries as winemakers began to build the necessary infrastructure to enable trade.

While Australian winemakers exporting to other nations have typically relied on large distributors, the relationship with China was handled through a network of import-exporters operating with a traditional wine merchant model.

These were usually Australians of Chinese heritage with connections at home who would tour a region to find what they liked and then approach the producer about setting up a relationship.

And what they wanted was premium red wine.

As a luxury item, a bottle could be brought out at weddings and business meetings, or uncorked at reunions with old friends. It served as an instant signal that its bearer was not only experiencing upward social momentum, but that they had the sophistication to know what was good and how to get hold of it.

Australian winemakers were only too happy to oblige. But the process was not always smooth.

The Chinese market was just as complex as the US, which was notoriously difficult to navigate. The Australian government trade body Wine Australia runs courses on the US wine market which describe it as “not one country, but 50 separate countries each with their own regulations that haven’t changed since Prohibition”.

If what was true for Beijing was not always true for Chengdu, the other issue was logistics. Not knowing what happened when a container was offloaded at the port was dangerous, and leaving a shipment to sit for a couple of months in a humid warehouse risked disaster.

By 2020 Australia was selling 146.1 million litres to China for a total value of $AU1.1 billion with an average price per litre of $7.45. By contrast, the combined export value of wine to the US and UK markets stood at $AU804.8 million, while the average price per litre stood at $1.58 in the UK, and $2.83 in the US.

Looking forward

With the drop off in trade, the industry is now looking for new opportunities.

One option is for producers to stitch together two or more export markets like South Korea and Vietnam, while others are eyeing off the recently signed free trade agreement with the UK or the rise of the Indian middle class.

The zero-sum nature of the global industry also means that as high-end winemakers in France, Spain and Chile move to take up Australia’s position in China, it may open up gaps in other markets for producers of premium wine.

While some regions like the Barossa in South Australia have a higher exposure to China, Jennifer Lynch, CEO of McLaren Vale Grape Wine and Tourism Association said her region only exported 10% of its crush to China and so local businesses are now looking to leverage any gaps in the market.

“We need to re-home about half a million cases, ideally, in export values and ideally in high value and profitable export markets,” Lynch said.

“So long as Australian producers, as they are, continue to remain flexible and agile, there will be opportunities to rehome these highly profitable wines too.”

Even if there is hope, there is recognition that the next few years will not be easy, especially in the wake of the pandemic and a record 2021 vintage. Oversupply will put grapegrowers under pressure, while navigating new trade export markets is not easy.

“The short-term answer is no one will be able to take up the market,” Battalenge said. “There are other markets growing strongly, which are those south-east Asian markets. But they don’t have the population of China.”

For his part, Brown says the change in circumstances is positive in that it serves as a cautionary tale about becoming too dependent on one income stream.

“China might be a dent in our income, it’s not the end of the world,” Brown says. “I still want to sell to China, but it’s about making sure your business has the structure, the plan and the base to make decisions that aren’t reactionary.

“China has sent us a great message. It’s not about saying, ‘No, I’m never going to do business with them again’ – it’s about making sure we have choice.”