The Japan Australia Economic Partnership Agreement (JAEPA), which was agreed by prime ministers Shinzo Abe and Tony Abbot, will see the elimination of the current 15% tariff on bottled wine over seven years, while the tariff on bulk wine will be eliminated immediately.
Wine exports to Japan were worth A$42m (US$39.5) to the Australian economy last year.
Export opportunities
The WFA’s Tony Battaglene said the agreement was good news for the Australian wine industry.
“Resolving the trade agreement with Japan is about developing export opportunities and giving wine a step-up in the evolving Japanese market,” Battaglene said. “The Japanese market shows great potential for Australia’s wine exports.”
Japan is currently Australia’s sixth largest market by value and volume, with wine consumption growing rapidly as the younger generation moves away from traditional products to wines.
“We are expecting to see strong growth in sparkling and still grape wines, with targeted sales of middle-to-premium Australian wine brands,” continued Battaglene.
“Just look at our major competitors such as Chile, which enjoyed significant increases in market share in Japan after completion of its free trade agreement in 2007. Australia now has the opportunity to follow suit.”
The Japan deal follows soon after a similar agreement was reached between Australia and South Korea. With the Far East fast opening up to wine exports, the industry is now hoping that ongoing trade discussions with China’s government will soon bear fruit.
Exports in the doldrums
This is especially important as Australian wine exports continue to decline in number, if not in value, according to figures released this week by the government’s Australian Grape and Wine Authority.
Total Australian wine exports declined by 2% to 684m litres over the last year, to a value of A$1.78bn (US$1.67bn). This was offset by a 6% increase in the average value of bottled exports to A$4.77 (US$4.47) per litre.
Worryingly, exports to China declined 12% to 37m litres, valued at A$217m (US$203m), last year, largely on the back of the austerity measures on the country’s government bodies, which have continued to impact on the mechanics of the imported wine sector.
“As a result of this, we encourage Australian wine companies to work with their importers and distributors on long term, brand building strategies in China,” said the Australian Grape and Wine Authority’s acting chief executive, Andreas Clark.
“This will help ensure that Australian wine maintains the highest average value per litre of the eight largest imported wine countries now and into the future.”