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Since 2020, the wine exports of the Australian company Treasury Wine Estate have slowed down significantly on the Chinese market, due to high customs duties. A crisis situation for the wine company, while China used to represent a third of its profits.
“It will take years to rebuild the Australian luxury wine market in China”, said Australian company Treasury Wine Estate last week. The Melbourne-based luxury wine company is signalling a weakened Australian wine market in China.
According to Tim Ford, Treasury’s managing director, the company’s wine sales in China will not return to pre-crisis levels, even if the high tariffs imposed in 2020 are dropped.
Treasury Wine Estate, which is the world’s largest independent wine producer, used to get a third of its profits from China. But that was before anti-dumping measures, imposing very high additional import duties, were imposed in 2020 by the Chinese on Australian wine.
Australia’s trade minister met with his Chinese counterpart in Beijing last week, seeking to end all trade barriers as part of improving diplomatic relations. And that’s while Chinese tariffs on Australian wine are still in place today.
“Treasury is closely monitoring how the Chinese and Australian governments are working to resolve the barley tariffs outside of the World Trade Organization, with the hope that the same path will be followed for wine”, Tim Ford said last Tuesday
Maintaining relationships
The company has continued to invest in marketing its Penfolds luxury wine brand in China over the past three years and supporting staff there. The idea was to maintain relationships, even though Treasury Wine Estate did not turn a profit during that time.
“Our brand awareness in China has increased over the last two years because of Penfolds”, Tim Ford told the Australia-China Relations Institute at the University of Technology Sydney.
For him, the main lesson is that Treasury should have invested earlier and more in the local Chinese wine industry.
“We don’t have any extra wine ready to be sold at more than A$100”, he said. “At A$30 a bottle and above, we could start supplying China fairly quickly, but it will still take us two, three or four years to start developing that supply.”
Weakened market
Since the onset of the crisis in 2020, many Australian winemakers have withdrawn from the industry, while in China the luxury wine segment has shrunk. Therefore, Treasury Wine Estate will not return to the previous level of the Chinese market in the next six years, without doing so at the expense of its other markets. However, the company does not plan to do so, said Tim Ford.
In February, Treasury Wine Estate said net profit for the first half of the year (ended December) jumped nearly 75% to A$188.2 million ($131.51 million) from the same period a year earlier, but fell short of analysts’ estimates.
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Since 2020, the wine exports of the Australian company Treasury Wine Estate have slowed down significantly on the Chinese market, due to high customs duties. A crisis situation for the wine company, while China used to represent a third of its profits.
“It will take years to rebuild the Australian luxury wine market in China”, said Australian company Treasury Wine Estate last week. The Melbourne-based luxury wine company is signalling a weakened Australian wine market in China.
According to Tim Ford, Treasury’s managing director, the company’s wine sales in China will not return to pre-crisis levels, even if the high tariffs imposed in 2020 are dropped.
Treasury Wine Estate, which is the world’s largest independent wine producer, used to get a third of its profits from China. But that was before anti-dumping measures, imposing very high additional import duties, were imposed in 2020 by the Chinese on Australian wine.
Australia’s trade minister met with his Chinese counterpart in Beijing last week, seeking to end all trade barriers as part of improving diplomatic relations. And that’s while Chinese tariffs on Australian wine are still in place today.
“Treasury is closely monitoring how the Chinese and Australian governments are working to resolve the barley tariffs outside of the World Trade Organization, with the hope that the same path will be followed for wine”, Tim Ford said last Tuesday
Maintaining relationships
The company has continued to invest in marketing its Penfolds luxury wine brand in China over the past three years and supporting staff there. The idea was to maintain relationships, even though Treasury Wine Estate did not turn a profit during that time.
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Since 2020, the wine exports of the Australian company Treasury Wine Estate have slowed down significantly on the Chinese market, due to high customs duties. A crisis situation for the wine company, while China used to represent a third of its profits.
“It will take years to rebuild the Australian luxury wine market in China”, said Australian company Treasury Wine Estate last week. The Melbourne-based luxury wine company is signalling a weakened Australian wine market in China.
According to Tim Ford, Treasury’s managing director, the company’s wine sales in China will not return to pre-crisis levels, even if the high tariffs imposed in 2020 are dropped.
Treasury Wine Estate, which is the world’s largest independent wine producer, used to get a third of its profits from China. But that was before anti-dumping measures, imposing very high additional import duties, were imposed in 2020 by the Chinese on Australian wine.
Australia’s trade minister met with his Chinese counterpart in Beijing last week, seeking to end all trade barriers as part of improving diplomatic relations. And that’s while Chinese tariffs on Australian wine are still in place today.
“Treasury is closely monitoring how the Chinese and Australian governments are working to resolve the barley tariffs outside of the World Trade Organization, with the hope that the same path will be followed for wine”, Tim Ford said last Tuesday
Maintaining relationships
The company has continued to invest in marketing its Penfolds luxury wine brand in China over the past three years and supporting staff there. The idea was to maintain relationships, even though Treasury Wine Estate did not turn a profit during that time.
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