Treasury maps out return to China wine market

Treasury Wine Estates the maker of Penfolds has welcomed moves by China to review its import tariffs slapped on Australian wine in 2020 and revealed how it will re-enter the critical growth market.

The company said that it has maintained its commitment to Chinese consumers throughout the period including experienced sales and marketing leadership in country.

It had continued to build its industry and country relationships through its ongoing import of multi-country of origin product, including launching its first Chinese produced luxury Penfolds wine.

Treasury told investors: “TWE is well placed to rebuild its business in China, should tariffs be removed at the end of the review period, through a series of plans which would be implemented progressively over time.”

Should tariffs be removed at the end of the five month review period the company will:

• Continue its existing China import strategy led by Penfolds French, US and Chinese product portfolios
• Rebuild distribution of Penfolds entry level luxury wines including Penfolds Max’s, Koonunga Hill and One by Penfolds.
• Reallocate a portion of the company’s luxury and icon ranges from other global markets
• And rebuild distribution for Treasury Premium Brands including Rawson’s Retreat.

CEO Tim Ford said: It’s great to see an agreement for an expedited pathway forward to allow our Australian brands and wine to be sold in the Chinese market.

“There are only positives to come out of a favorable review for the Chinese consumer, customers and the wine category, for the Australian wine industry and for TWE.”

In fact, while the China tariffs hurt TWE in the short term they have led to a substantial improvement in the business which will pay back into the future.

The company has divested itself of some commercial wine brands, closed some vineyards and focused on the premiumisation of its portfolios.

This has led to rising prices achieved per litre of wine sold and higher profits.

Further reading:
China moves to lift tariff on Australian wine
Browse @AuM<anufacturing’s coverage of Penfolds in China here.

Picture: Penfolds/Dr Christopher and Mary Penfold planted the vineyard at Magill Estate, Adelaide in 1843