Australia’s Treasury Wine to rebuild China business after tariff review

By alexandreBusiness

Australia’s Treasury Wine to rebuild China business after tariff review

Australia’s Treasury Wine to rebuild China business after tariff review

Australia’s Treasury Wine Estates, one of the world’s largest wine companies, is set to rebuild its business in China following a recent review of tariffs imposed on Australian wine imports. The company has faced significant challenges in China since November 2020, when the Chinese government implemented anti-dumping measures and imposed tariffs of up to 218% on Australian wine.

The review of tariffs, which was initiated by the Chinese Ministry of Commerce, aimed to assess whether the anti-dumping measures and tariffs were warranted. As a result of the review, the Chinese government announced that it would maintain the tariffs for the next five years. However, the government also stated that it would allow Australian wine companies to apply for an exemption from the tariffs on a case-by-case basis.

Seeking exemption

Treasury Wine Estates has indicated that it will be seeking an exemption from the tariffs in order to rebuild its business in China. The company has a significant presence in the Chinese market, with its brands including Penfolds, Wolf Blass, and Lindeman’s being well-known and highly regarded by Chinese consumers. However, the high tariffs have severely impacted the company’s sales and profitability in China.

In order to qualify for an exemption, Treasury Wine Estates will need to demonstrate that its exports to China do not harm the domestic Chinese wine industry. This may involve providing evidence that the company’s pricing is fair and that its products do not undercut the prices of domestic Chinese wines. Additionally, the company may need to show that it is actively cooperating with the Chinese government’s investigation into allegations of anti-dumping practices.

Alternative strategies

While seeking an exemption from the tariffs is a key strategy for Treasury Wine Estates, the company is also exploring alternative strategies to rebuild its business in China. This includes focusing on other markets in Asia, such as Japan and South Korea, where there is a growing demand for Australian wine.

Additionally, Treasury Wine Estates is looking to diversify its product offerings in China. The company is planning to expand its portfolio of lower-priced wines, as well as introduce new products that cater to Chinese consumers’ preferences, such as sweeter wines. By offering a wider range of products at different price points, the company aims to attract a broader customer base in China.

Long-term outlook

Rebuilding its business in China will not be an easy task for Treasury Wine Estates. The high tariffs and ongoing trade tensions between Australia and China present significant challenges. However, the company remains committed to the Chinese market and believes that there is still strong potential for growth.

In the long term, Treasury Wine Estates is optimistic about the prospects of the Chinese wine market. China is the world’s largest consumer of red wine and has a growing middle class with increasing disposable income. As such, the company sees China as a key market for its premium wine brands.

Despite the challenges, Treasury Wine Estates is determined to rebuild its business in China and regain its position as a leading player in the Chinese wine market. Through seeking exemptions from tariffs, exploring alternative markets, and diversifying its product offerings, the company aims to overcome the current obstacles and once again thrive in China.