What can you do as the owner of a small or medium-sized business when your biggest market is suddenly shut off?
If you’re Chris Grigoriou you might first soften the blow with a glass of vintage red from the family vineyard. Then you dust yourself off, get out your contact book and start looking for alternative buyers and markets.
In all of Grigoriou’s 45-year career in the wine industry, nothing had an impact like China’s move in 2020 to slap punitive tariffs on Australian wine following a diplomatic spat with Canberra.
“Overnight, we lost 85 per cent of our business,” Grigoriou tells Wire in an interview. At the time, he was sending around 400 shipping containers a year to China for customers, compared to about 80 to other destinations.
“We looked around for other opportunities and people soon started giving me work. In about three months of the China tariffs we were back up to full speed, so it was a quick turnaround.”
He was able to grow shipments to other Asian markets, such as Japan, Thailand and Vietnam, while establishing new markets including Cambodia and Fiji.
But it was a major business pivot taken some years earlier that really helped him through the crisis.
Having previously worked for major wine brands, Grigoriou decided to set out on his own in 2003, establishing Portia Valley Wines in the Riverland region of South Australia. Then in 2014 he spotted a gap in the market and branched out into a bottling operation. That was initially based in the Barossa Valley, to be close to potential customers, but it soon became clear that the business needed to be closer to the port for better ease of access to export markets.
South Australian Wine Bottlers relocated to premises in the Adelaide suburbs, where it grew rapidly and is now pumping out around 800,000 cases of wine per year.
While the China tariffs were a big blow, the bottling operation provided good insulation from the fall out in his broader wine business. As Grigoriou points out: “whether you sell your wine for a profit or at a loss or even give it away, you’ve still got to put it into a bottle, so I’m providing a necessary service.”
SAWB has benefited from smaller winemakers, in South Australia and beyond, appreciating the personalised service offered by his family-run business. In an industry dominated by a couple of big players, it’s increasingly hard to find reliable independent bottlers, Grigoriou says.
In contrast to the China tariffs, the wine industry fared reasonably well through COVID: “If anything, it increased domestic sales and internet sales,” Grigoriou says. Still, the labour shortages that emerged out of the pandemic have had an impact, and he notes plenty of ‘Staff Wanted’ signs outside vineyards across the region.
Grigoriou has a relatively small headcount of around 30 people and puts his success at retaining staff down to the extended family atmosphere he’s created around the business.
“I have machinery worth several million dollars and it can be as good or as fast as anybody else’s but if I don’t have good staff then the machine is useless. So family extends out to all the staff.”
He also takes sustainability seriously. Grigoriou says his business recycles up to 98 per cent of everything it uses, while a small solar plant on site produces enough power for his own operation with some left over to feed back into the grid.
“Small and medium sized Australian businesses are the backbone of our national economy. In South Australia they have a larger share of the state’s economy compared to the nation, contributing also to 55 per cent of the state’s employment,” says Jason Yetton, chief executive, consumer who recently caught up with Grigoriou at his Adelaide facility.
“BankSA has partnered with Chris for over 30 years and it has been a privilege to support the evolution and expansion of his family’s business.
“South Australian Wine Bottlers is a fantastic demonstration of the critical role small and medium businesses play within our Australian industries. It’s the deep knowledge and continuous innovation of business owners like Chris, that allows these businesses to pivot with the challenges from competition to trade restrictions and to seize the new opportunities for growth.”
As for the China tariffs, there are encouraging signs that they might soon be lifted as diplomatic relations with Beijing begin to normalise.
Even so, it could be several years before the wine trade with China gets back to pre-tariff levels. The Chinese economy is facing challenges which have dented the spending power of the country’s growing middle class.
“None of us are hanging our hats on China,” Grigoriou says. “I don’t believe that the market will be any more than 20 per cent of what it used to be at least for the next 2-3 years.”
The industry also faces challenges from a supply glut affecting most wine-growing regions around the world, along with changing drinking habits which have seen Europeans in particular consuming less wine.
While the industry will need to adapt, Grigoriou has seen a lot of changes over his long career and says there will always be a market for quality Australian wine at the right price point.
“It's about always looking to renew and reinvent yourself, finding what other niches in the industry you can get into as well as servicing existing customers.”