One of Australia’s largest wine exporters has said that a free trade agreement with the UK would reduce the cost of better quality wine for British drinkers while helping to fill the void left by a collapse in exports to China.

Australia’s wine industry has been grappling with hefty tariffs of up to 218 per cent imposed by Beijing last year as diplomatic and economic tensions between the two countries increased.

Limestone Coast Winery, one of the 20 largest Australian wine exporters by value, had its profit margin “disappear overnight” given that China accounted for about 50 per cent of revenue and most of its cash flow.

“It was ‘Black Friday’ when the tariffs came down,” said Richie Vandenberg, chief executive of the South Australian producer. Overall, Australian wine exports to China sank 96 per cent year on year between December and March, according to data from Wine Australia, a government body.

But the prospect of a tariff-free, quota-free UK-Australia trade deal has strengthened hopes that the UK will fill the void left by China.

Grapevines at a winery in the Yarra Valley, Victoria. Beijing’s introduction of tariffs last November caused Australian wine imports to plummet © James Bugg/Bloomberg

Wine is the largest export from Australia into the UK, ahead of lamb, but it is subject to a tariff that adds roughly 10p to 12p per bottle of wine, according to Wine Australia.

Limestone Coast Winery, which is behind The Hidden Sea label but also supplies supermarket own-brand wines, said this makes the country “by far” the least profitable market for its products but that a tariff-free arrangement would enable it to compete.

Justin Moran, a co-founder of the company, said: “Chilean wine has a 13 per cent tariff advantage over us in the UK. If Australia can do a good deal with the UK it would have a huge benefit to Australia wine and benefit the UK consumer.”

A UK-Australia deal has been mired in controversy as farmers have warned that tariff-free beef and lamb imported from Down Under could have a devastating effect on farming in the UK. The Australian Agricultural Company, the country’s biggest beef exporter, said this week that a tariff-free deal could boost its UK sales ten-fold.

Vandenberg, speaking from the Coonawarra region where the group sources its fruit, argued that the UK and Australia are natural trading partners. “I have empathy for Scottish farmers but it would be a shame if it stopped a free trade deal between the UK and Australia,” he said. “We are a big trade partner. The UK consumer will win out.”

Not all Australian wine growers are banking on the ‘old world’ to offset the impact of the Chinese tariffs. Accolade Wines, owner of the Hardys and Echo Falls brands, said it would ship wine from Chile and elsewhere to China to bypass the levy.

Australian wine exports to the UK grew by a third to $461m between December and March, while the volume shipped grew by a fifth to 264m litres. The average value received for Australian wine in the UK increased 10 per cent to $1.75 per litre, the highest level in a decade.

Limestone Coast Winery, which has sold 100m litres of wine since it was founded in 1998, hopes to use savings from the potential lifting of UK tariffs on promoting The Hidden Sea brand — that uses profits to remove plastic from the Indonesian seas.