Treasury Wine Estate Wines At Company Headquarters Ahead Of Full-Year Results
Treasury Wine Estate Wines At Company Headquarters Ahead Of Full-Year Results

Big consequence of Chinese tariffs

Penfolds owner Treasury Wine Estates (TWE) says the latest trade spat between Australia and China has put up to 30 per cent of the group's earnings in jeopardy.

In a statement to the Australian Stock Exchange on Monday, TWE said it would be redirecting its luxury wines to other key markets as a result of Chinese trade authorities slapping Australian winemakers with new import tariffs.

On November 27, the Chinese Ministry of Commerce imposed tariffs of more than 200 per cent following allegations Australian winemakers were dumping wine into the Chinese market to lower the price.

The wine industry is the latest sector to be hit by souring trade relations between Australia and China that have already impacted other agricultural and resource exporters.

TWE chief executive Tim Ford flagged the company would continue to export wine to China; however, the sanctions would cost Australian jobs across the industry.

"There is no doubt this will have a significant impact on many across the industry, costing jobs and hurting regional communities and economies which are the lifeblood of the wine sector," Mr Ford said.

"We will continue to work with our customers and partners in China to demonstrate our long-term commitment to the growing number of Chinese consumers who enjoy our brands."

In financial year 2020, exported wine to the Chinese market represented 30 per cent of TWE's total group earnings.

The company primarily ships premium wines to the major Asian economy, with luxury and masstige wines making up 63 per cent of exported volume and 91 per cent of revenue.

Approximately 39 per cent of Penfolds wine - TWE's premier brand - is sold to China.

"We will continue to work with our valued partners to further understand the implications and

how we can work with the industry, governments and others to support the sector," Mr Ford said.

"We will continue to engage with the Chinese Ministry of Commerce as the investigation proceeds to ensure our position is understood. We call for strong leadership from governments to find a pathway forward."


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