Treasury Wine prepared for unlocking exports to China

The maker of Penfolds Grange, Treasury Wine Estates has noted an interim draft determination by the Chinese Ministry of Commerce that would reopen the China market to Australian wine exports.

The determination outlines a proposed removal of the current tariffs which have crippled what was once a $1.2 billion export trade with China – reducing it to $10 million and hitting wine producers.

Treasury said the determination was not final and could be revised by the ministry.

“TWE anticipates that MOFCOM will release a final determination in the coming weeks.”

TWE referred to its FY24 results in which it outlined the steps it had taken to prepare for the reopening of exports.

Planned initiatives included continuing the company’s multi-country origin strategy, re-establishing distribution of entry level wines including Penfolds Max, Koonunga Hill and One by Penfolds and reallocating some Penfolds Bin and icon wines to progressively rebuild Chinese distribution.

The company does not expect any incremental contribution to profits this financial year from a re-opening.

Meanwhile Australian Grape & Wine Chief Executive Lee McLean said: “While we acknowledge this interim decision, we note that the final outcome is still pending.

“As such, we remain cautiously optimistic about the forthcoming decision and will await [the] final determination.”

The wine industry is reeling not just from China, but from oversupply which is hitting grape growers in the Riverland, Murray Valley and Riverina particularly hard.

In response governments established a viticulture and wine sector working group.

As noted in an Agriculture Ministers’ Meeting Communique, Ministers agreed to establish a viticulture and wine sector working group, comprising representatives of the Commonwealth, state and territory governments, Wine Australia, Australian Grape and Wine and other relevant groups as agreed by the working group, to provide recommendations to Agriculture Ministers to address the challenges facing growers.

Further reading:
Penfolds could be headed for China after March – Treasury Wine Estates

Picture: Berri Estates Wines – Riverland wine producers are under stress