EU tariff removal ‘levels the competitive landscape’ for Australian wine

The long-negotiated trade agreement between Australia and the European Union is set to reshape the commercial landscape for Australian wine exports. Tariff elimination and regulatory changes promise improved competitiveness in one of the world’s largest wine markets.

Industry figures say the agreement arrives at a moment when producers are seeking stable, high-value destinations amid global oversupply and shifting trade conditions.

After eight years of negotiation, Australia and the European Union have concluded a free trade pact that will remove import tariffs on Australian wine entering EU markets once the agreement comes into force. Talks had previously stalled in 2023 following disagreements over agricultural quotas, including Canberra’s request for a low tariff quota on more than 40,000 tonnes of beef annually.

The renewed compromise arrives against a backdrop of wider trade disruption. Both partners have faced tariffs imposed by the United States, prompting fresh impetus to reach a deal.

The agreement removes EU import duties on Australian wine, an outcome widely viewed by the wine sector as commercially significant.

Lee McLean, chief executive of Australian Grape and Wine, said the tariff outcome would have a direct impact on exporters.

“The removal of tariffs on Australian wine entering the EU is good news for our exporters and for the long-term competitiveness of Australian wine in a major global market,” he said.

According to Australian Grape and Wine, the tariff change is expected to deliver around AUD $14.5 million in annual savings for the sector.

Europe already plays a substantial role in Australia’s export strategy. According to Australian Grape and Wine figures, Europe remains Australia’s largest export region by volume. In 2025, 245 Australian wine exporters shipped 76 million litres of wine worth $143 million to EU member markets.

Competing in a market dominated by local producers

The European Union is both a leading producer and consumer of wine, making market entry challenging for external suppliers. According to IWSR, the EU consumed around 1.2 billion nine-litre cases of wine in 2024, roughly half of global consumption. More than 90 per cent of the wine consumed in the bloc is produced domestically, primarily in Italy, France, Spain and Germany.

Despite this dominance, imported wines maintain an important niche. Trade Data Monitor figures show that imports from outside the EU fell by 6 per cent in the twelve months to September 2025, with Chile and South Africa remaining the largest non-EU suppliers and Australia ranking third.

Those two competitors already benefit from tariff-free access.

Dr Martin Cole, chief executive of Wine Australia, said the removal of EU tariffs would improve Australia’s ability to compete with those countries.

“Removing EU import tariffs on Australian wine is an important opportunity to level the competitive landscape,” he tells the drinks business. “According to IWSR, Australia currently trails Chile and South Africa for imports to the EU, both of which already export to the EU tariff-free. In the intensely competitive EU wine market, tariff elimination strengthens Australia’s ability to compete with other imported wines on more equal terms.”

Beyond tariffs: regulatory changes and easier trade

The trade pact is accompanied by a revised Australia-EU Wine Agreement that builds on earlier accords reached in 1994 and 2009. Those previous agreements had already reduced technical barriers faced by exporters.

Dr Cole said the practical effects of regulatory simplification may prove just as important as the tariff change.

“The agreements include the Australia-EU Free Trade Agreement and a new Australia-EU Wine Agreement, which builds on earlier wine agreements from 1994 and 2009 that reduced non-tariff barriers for exporters,” he says.

“For example, the wine agreements have meant fewer changes to labelling and winemaking practices that Australian wineries need to do in order to sell their wines in the EU, which is an enormous benefit.”

The new Wine Agreement introduces simplified certification, reduced analyte testing requirements and what Dr Cole describes as “most favoured nation” treatment for export certification. It also includes protection for seven additional Australian geographical indications and seven grape variety names.

These changes are intended to reduce administrative costs for wineries seeking to enter European markets.

According to the European Commission, the wider trade agreement removes tariffs on almost all EU goods exports and deepens investment and trade ties between the two economies.

Australia represents Oceania’s largest economy with an annual GDP of €1.7 trillion, according to the European Commission, and the EU exported €37 billion in goods to Australia in 2025 alongside €31 billion in services in 2024.

A mixed outcome for Prosecco producers

One of the more contentious elements concerns the use of the term Prosecco.

Under the agreement, Australian producers may continue using Prosecco as a grape variety name within Australia’s domestic market. However, exports labelled as Australian Prosecco will be phased out over a ten-year period as the EU protects Prosecco as a geographical indication.

McLean described the arrangement as a compromise. “The Government has successfully negotiated the retention of the name Prosecco for use in Australia’s domestic market,” he said. “That provides certainty for a domestic prosecco market worth in the order of $200 million per year.”

However, he added that the change would affect exporters who currently ship Australian Prosecco abroad. “This is clearly a blow for those Australian producers who currently export Australian Prosecco, who will need to transition to an alternative term for export markets.”

The Wine Agreement includes provisions safeguarding the continued use of other established grape variety names by Australian producers, even if those names are recognised as EU geographical indications in the future.

Export diversification in a changing market

Industry participants believe the agreement may support broader export diversification efforts. Danny Celoni, chief executive of Vinarchy, the company formed following the merger of Accolade Wines and Pernod Ricard’s wine division, described the agreement as a significant step for exporters with an established presence in Europe.

“As a major Australian wine producer with a significant export footprint across Europe, we commend the Australian Government and Minister for Trade Don Farrell for securing this important trade deal for Australia,” he said.

“The removal of tariffs on Australian wine exports to EU member states will support the long-term competitiveness of Australian wine on shelf in a vital export market, while paving the way for further cooperation on wine trade into the future.”

Dr Cole said the combination of tariff removal and reduced bureaucracy could help producers diversify their export footprint. “Combined with tariff removal and the reduced red tape, the agreements support Australian wine exporters’ diversification efforts by making the EU more accessible and less costly to do business in,” he says. He cautioned, however, that the market environment remains complex.

“With most EU producing countries experiencing significant oversupply and with IWSR forecasting that wine consumption in the EU will flatten over the next five years, a targeted and strategic approach to specific markets will be needed.”

A significant but competitive opportunity

The European Union represents roughly 14 per cent of global GDP according to the International Monetary Fund, making it one of the most valuable wine markets in the world.

Consumption trends show mixed signals. IWSR reports that EU wine consumption volumes have declined by about 3 per cent annually over the past five years, while value has increased by around 1 per cent per year. Forecasts suggest the value of wine consumption will remain broadly flat over the next five years.

Within that environment, tariff-free access offers Australian producers a stronger footing but not an automatic advantage.