China-Australia relations: Treasury Wine readies to ship Penfolds, Icon bottles once Beijing lifts import tariffs

China-Australia relations: Treasury Wine readies to ship Penfolds, Icon bottles once Beijing lifts import tariffs

Treasury Wine Estates is planning to reallocate a portion of its Penfolds Bin and Icon wines from other global markets to China once Beijing lifts crippling tariffs on Australian exports.

China remains the single greatest opportunity for the company should the country reopen its doors to Australia, CEO Tim Ford said during an investor call on Thursday for the company’s first-half report.

The Chinese market accounted for about 30 per cent of Treasury’s earnings before the implementation of levies in March 2021.

Beijing is conducting a review into the tariffs on Australian wine, and it is widely expected that the levies will be removed next month.

If we get back in and re-establish Australian wine, that’s a re-establishment for the next decade and beyond
Tim Ford

Treasury said last year that the company could quickly ramp up exports of bottles priced in the A$30 (US$19) to A$40 range, including Penfolds Max’s, should the duties end.

Penfolds Bin and Icon wines are priced at between A$60 to A$1,000.

“We’re confident that China does remain an attractive luxury wine market for our brands and a significant growth opportunity for Penfolds over the long term,” Ford said.

“If we get back in and re-establish Australian wine, that’s a re-establishment for the next decade and beyond.”

Australia’s wine trade with China was worth more than A$1 billion in 2018-19 and 2019-20 before the tariffs, which were implemented amid deteriorating ties between the nations. Some levies were as high as 218 per cent.

Treasury reported an 11 per cent decrease in net income for the first half on Thursday, driven by a decline in its Americas and Premium brands.

“We expect a decision, and therefore a path forward, by the end of March,” Ford added.

“We are both well prepared and well placed to re-establish our Australian country-of-origin portfolio in China,” he said, adding that China presented a “significant growth opportunity” for Treasury’s higher-priced Penfolds division.

Critics score Penfolds’ first made-in-China wine, priced at US$100 a bottle

Melbourne-based Treasury, whose brands range from Wolf Blass and Lindeman’s to Beringer and DAOU, has continued to ship wine made outside Australia to China and said it has more than 120 staff there.

Treasury produces wine mainly in Australia but also in the United States, New Zealand, France and Italy.

Additional reporting by Reuters

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