TAKING YOUR WINE BUSINESS GLOBAL

Source: Wine Australia, 2018

AUSTRALIA’S WINE EXPORTSWith international demand for Australian wine reaching a high of $2.82 billion in 2018, the opportunities for Australian wine businesses continue to grow.

Consumer demand from China and increased market access through the free trade agreements (FTAs) have played a key role.

Have you considered the international opportunities to grow your wine business’ revenue?

$1.14b $425m $389m

How our guide will help youYou’ll get insights into:

■■ the process of getting your wine ready for export■■ managing your export business cashflow■■ how to access finance for your export contracts■■ growing your business to attract international tourists■■ support available for your wine business.

Top 3 export markets

$2.24b $560m $546m

$2.14b $607m

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ium

Unp

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Bott

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Wine exports on growth trend

up 12%

down 5%up

18%

up 7%

up 12%

up 10%

up 27%

up 7%

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Source: Department of Foreign Affairs and Trade, Austrade

NEW MARKETS Investing time to establish relationships with key networks and associations is key to your wine business’ success. Austrade outlines the steps you can take to help you make your transition into new export markets as easy as possible. Some of these are:

Network with peers■■ Look to country specific business councils, like

Australia China Business Council, to provide information on programs and opportunities to network with peers. They also host events with senior contacts within specific governments.

■■ Wine Australia works closely with wine representative organisations, wine sector bodies and partners to support the long-term success of the Australian grape and wine community.

Understand the business culture■■ It’s important to understand the local business

culture to ensure you have an appreciation of the expectations of doing business in each new market. For example, building up strong relationships and trust before closing a deal is very important in China – often this happens over a series of dinners with senior people.

■■ Download Efic’s Exporting to China, Japan and South Korea eBook for information on these growing markets.

■■ For more information on specific countries, visit Austrade’s country profiles.

Decide on a distribution channel■■ Most wine businesses will set up an agent

who is also an importer. An advantage of appointing an agent is that they will have a network of distributors or retail outlets already set up.

■■ Consider the country you want to enter and understand what channel will work best. For example, in China there are a number of online platforms for wine and spirits, including Alibaba and Tmall. Austrade has global offices that can also provide support.

Seek advice■■ As with any business venture, receiving good

quality legal, tax and professional advice is critical before making important decisions.

■■ When operating overseas, it may be beneficial to use a legal firm with a local presence to ensure you are complying with regulations and laws.

Meet regulations■■ When exporting your wine, you

need to be aware of all the local and international regulations you need to meet. You can find more information on the Wine Australia website.

■■ Ensure you are meeting the import requirements for each country. Making mistakes could add further costs to the export process.

Dylan Fairweather Managing Director

Alpha Box & Dice

“ We’ve found the key is establishing partnerships with the right people and finding those people around the world that are really passionate about what we do. ”

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PARTNERING FOR SUCCESS Understanding your market will help you choose the partnerships that will enable you to maximise the opportunities for your wine business.

Export merchants Normally based in Australia, export merchants have strong links with a country or a particular market segment. Exposure is minimised as the merchant normally purchases the product in Australia, ships, insures and takes the payment risk.

Agents

Working on your behalf, agents seek out potential clients for your product. They do not take ownership of the goods and can be paid a salary, retainer or commission, or a mix of all three.

Distributors Taking ownership of the goods and paying the exporter for them, distributors will then market and resell, often providing after sales service. As distributors own the stock and have an investment in representing a product, they are normally performance driven and usually have strong market knowledge.

Suppliers It’s important to partner with a supplier that understands your wine business and target market and will work with you. Often your suppliers will have valuable insights that can help you avoid unknown risks or pitfalls.

Joint venture When exporters enter into joint venture arrangements, they are usually financially driven, with shares held by both parties involved. Many joint ventures are between parties who have past experience in working together in a distribution arrangement.

Advisors You should consider working with legal, accounting and foreign exchange professionals who have experience in the markets you deal with. They can help you to identify and manage potential issues and help you to streamline the business’ regulatory and taxation compliance, while making the most of currency conversions.

Business advisors who specialise in export businesses can also help to open doors overseas, and help make you aware of new opportunities.

Liquor control boards

Liquor control boards are government run agencies which regulate liquor licensing, importation of alcoholic beverages and labelling and packaging standards. If you’re exporting to a country with a liquor control board make sure you consult with them and understand their processes.

Nigel Ludlow Founder

Evoi Wines

“ None of it’s easy – brand recognition and getting your name out there has been the hardest step for me. Finding the right partner is also key. ”

Austrade’s Australian Suppliers Directory promotes Australian products and services to overseas buyers. Register your business now.

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BENEFITING FROM FTAs Australia’s FTAs with China, Japan and South Korea have created exciting opportunities for Australian wine exporters. Demand from Northeast Asia continues, with the value of exports to the region growing by 19% to $1.23 billion in 2018. The FTAs continue to support the growing trade and investment relationships between the North Asia region economies and Australian wine exporters. Maximise the benefits for your wine business by understanding the opportunities available when exporting to these growing markets.

China-Australia Free Trade Agreement (ChAFTA)■■ ChAFTA provides Australia with an advantage over our

major agricultural competitors, including the United States, Canada and the European Union.

■■ 93% of Australian exports now enter China duty free or at preferential tariff rates.

■■ As of 1 January 2019, wine tariffs have been elimated.

Japan-Australia Economic Partnership Agreement (JAEPA)■■ More than 98% of Australia’s exports to Japan will enter

duty-free or will receive preferential access when JAEPA is fully implemented.

■■ The 15% tariff on bottled wine will be progressively eliminated by 2021. The tariff on bulk wine was immediately reduced to zero under JAEPA.

■■ Check the FTA Portal for reduced tariffs rates.

Korea-Australia Free Trade Agreement (KAFTA)■■ 99.7% of Australia’s goods exports (by value) to

Korea will enter duty free on full implementation of the  agreement.

■■ KAFTA has enabled Australia’s agriculture exporters to compete in this highly protected, lucrative market.

■■ The 15% wine tariff was immediately eliminated.

Source: Department of Foreign Affairs and Trade, JAEPA, Austrade

For information on the export procedures, duties and taxes and regulatory requirements for exporting wine to China, visit the Wine Australia website.

Wine Australia has more information on their website outlining what you need to think about when exporting wine to Japan.

Visit the Wine Australia website for more information on the regulatory requirements and standards for exporting wine to Korea.

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GETTING YOUR WINE READY TO GO GLOBAL Do you understand the regulatory requirements for exporting your wine? To ensure a smooth process, make sure you know what documentation you need before you get started.

Licence to export

■■ If your individual export shipments exceed 100 litres, you need to obtain a licence to export.

■■ Your licence application will be assessed against a list of criteria including financial standing, place of business, and your ability to obtain grape products from Australian suppliers.

■■ Wine Australia undertakes about 400 audits a year. Failure to keep records can result in prosecution with penalties.

Register your product

■■ You need to register each product with Wine Australia before you export.■■ The application process requires analysis details for each wine you

are exporting, including compositional details.

Getting an export permit

■■ You need to submit a shipping application for each consignment of wine exceeding 100 litres.

■■ Your permit application must be submitted 10 days before departure date.

Label Integrity Program

■■ If you’re part of the wine supply chain, you need to follow the Label Integrity Program (LIP) to verify the information on your wine labels.

■■ Information required on a LIP statement includes vintage, grape variety, geographical origin and identities of the supplier and customer.

Export certificates

■■ You may need to provide additional certificates when exporting your wine to new markets.

■■ If you’re exporting to the EU you will need a VI1 certificate for each product. The analysis can be provided by NATA-accredited labs approved by Wine Australia.

■■ If you’re claiming your products are ‘organic’, ‘biodynamic’, ‘biological’ or ‘ecological’ you must comply with the provisions of the Export Control (Organic Certification) Orders issued under the Export Control Act, 1982.

Source: Wine Australia

For more information on key steps you should think about when starting to export your wine, download the Wine Australia Compliance Guide.

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THE COSTS OF TAKING YOUR WINE GLOBAL You’ve invested a lot of time into getting your wine business ready to enter new overseas markets. Understanding the costs involved in getting your wine to your international customers will help you manage your cashflow.

Wine export charge This fee is payable by Australian wine exporters to help fund the market development activities of Wine Australia. The purpose of these activities is to increase the demand of Australian wine, both in Australia and overseas. This charge is calculated as a percentage of your free on board (FOB) sales value.

Export feesLicence application and renewal, product registration, shipping applications, and export certificates all add up. Make sure you understand all of the costs associated with getting your wine product overseas. Quantities will also affect the charges applied.

Setting up an agent/distributorGetting the right distribution channel is critical. There will be costs associated with setting up the right agent or distributor, as well as ongoing commissions you will need to pay. It’s important to understand what commission you will be paying, as well as potential mark-up fees to ensure these are built in to your final retail price.

Free on board (FOB)If you choose to quote your goods FOB, you will be required to pay for the costs of getting your consignment to the ship at the port of shipments. Once your goods are on board the ship, the buyer is responsible for the cost of freight, insurance and all other charges from that point forward.

Cost, insurance and freight (CIF)If quoting your goods CIF, you will be responsible for the costs of getting your product on the ship, as well as the cost of the freight and insurance until your goods pass the rail at destination. One of the risks associated with CIF is deciding which currency to quote in as it may leave you exposed to adverse exchange rates.

Source: Wine Australia7

FINANCING YOUR EXPORT BUSINESS Financing your wine business growth is a challenge faced by many businesses. The upfront costs associated with fulfilling international orders can put pressure on your cashflow, which in turn impacts other aspects of your business.

Financial support from EficAt Efic we understand how unique wine businesses are and have a range of finance options available to help you succeed.

Export loans

Tailored for wine businesses that need additional working capital to support export orders, increased production capacity or expansion.

Guarantees

Working with your bank or your buyer’s bank, we can provide guarantees so your wine business can get access to additional finance to fulfil export-related transactions or build an overseas presence.

PASSION TO GO GLOBAL

Case study: Alpha Box & DiceEfic’s Small Business Export Loan has enabled Barossa Valley wine business Alpha Box & Dice to grow their exports across the UK, Europe and Canada.

Alpha Box & Dice started as a passion project for brothers Dylan and Justin Fairweather. “While the aim of the business is obviously to grow and be financially stable, our real goal is getting the stories behind the wines out to the rest of the world,” said Dylan.

Export has taken off, with a focus on the UK, Canada and the Nordic regions.

Like many small and medium wine exporters, managing their cashflow is a constant challenge.

“That’s where Efic, through its Small Business Export Loan, has been very helpful to us, as it’s allowed us to fulfil a number of new overseas orders,” explained Dylan.

The loans have supported the packaging, labelling and delivery costs associated with the export purchase orders.

“Efic’s Small Business Export Loan allowed us to keep fulfilling orders for wine that we’ve produced, ensuring we enhance our reputation through keeping up with the interest we’re receiving from overseas,” said Dylan.

Dylan Fairweather Managing Director Alpha Box & Dice

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GROWING YOUR INTERNATIONAL TOURISM BUSINESS Australian tourism is booming with international visitor spending reaching a new high of $43.2 billion for the year ending September 2018. This is a 5% increase on the previous year.

With the introduction of Wine Australia’s Wine and Cellar Door Grant, and Efic’s ability to support Australian tourism businesses, it may be the time to start thinking about growing your international visitor numbers.

How can Efic help?We can help your wine business with short term working capital or longer term loans for expenses related to attracting international visitors.

Working capitalYou need funds to:

■■ hire more staff to service international customers

■■ undertake marketing to attract more international visitors

Longer term loansYou need funds to:

■■ refurbish your cellar door to attract international tourists

■■ upgrade systems to be able to service your international visitors more efficiently

Learn about Efic’s finance options to help you grow your international visitors.

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RESOURCESThere is a wealth of detailed, easy to access information available to help Australian wine businesses planning to grow their exports.

EficEfic provides finance support to Australian wine businesses to help them grow their exports.

We also provide a number of resources forexporters, including our Exporter Journey, which walks companies through the steps tosuccessful exporting.

Wine AustraliaWine Australia is a government agency that supports a competitive wine sector by investing in research, development and extension (RD&E), growing domestic and international markets, protecting the reputation of Australian wine and administering the Export and Regional Wine Support Package.

Find out how you can access the $50m Export and Regional Wine Support Package.

AustradeAustrade, the Australian Government’s trade and investment agency, can provide you with practical advice, support and insight into many of the countries to which you’re looking to export.

Austrade provides information and advice to assist Australian companies to reduce the time, cost and risk associated with exporting, as well as Export Market Development Grants to support your export growth.

Export Council of Australia (ECA)Export Council of Australia is the main industry body for Australian exporters and provides resources, support and information to help Australian business succeed overseas.

Find out how the ECA can support your international growth.

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Discover how Efic can help your business take on the worldEfic is Australia’s export credit agency. We offer finance options by working with your bank to provide supplementary finance, or support when your bank may be unable to help.

To find out more about how Efic could help your wine business, go to efic.gov.au or call 1800 093 724.The information in this document is published for general information only and does not comprise advice or a recommendation of any kind. A person or entity should seek their own independent legal and financial advice. While Efic endeavours to ensure this information is accurate and current at the time of publication, Efic makes no representation or warranty as to its reliability, accuracy or completeness. To the maximum extent permitted by law, Efic will not be liable to you or any other person for any loss or damage suffered or incurred by any person arising from any act, or failure to act, on the basis of any information or opinions contained in this document.

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