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Winemakers rush to rebuild brand presence in China after tariffs lifted

(Source: TWE)

Listed Australian wine giant Treasury Wine Estates says it is taking “immediate action” to re-establish partnerships with Chinese customers and partners after China’s government confirmed the axing of tariffs on Australian wines. 

The tariffs were imposed for geopolitical reasons three years ago and effectively destroyed the $1.2 billion export market there. After extensive negotiations between the two countries’ governments, the tariffs – imposed due to allegations of dumping which were never evidenced by China – were reduced to 0 per cent, effective March 29. 

TWE CEO Tim Ford described today’s announcement as “a significant positive not only for Treasury Wine Estates, but also for the Australian wine industry and wine consumers in China”. 

“Since the tariffs were introduced three and a half years ago, our commitment to China has been resolute, and we now look forward to partnering with our local customers to re-establish our Australian country-of-origin portfolio in the market while continuing to be a meaningful contributor to the development and growth of the Chinese wine industry.”

TWE had been anticipating the tariff’s lifting and last month detailed a strategy for returning to the market when conditions allowed. That strategy is based on: 

  • Re-establishing distribution for Penfolds entry-level Australian country-of-origin portfolio, including Penfold’s Max’s, Koonunga Hill and One by Penfolds. 
  • Re-allocating a portion of Penfolds Bin and Icon tiers from other global markets in order to progressively re-build distribution to China, while maintaining the strong momentum in those other markets where Penfolds has successfully grown in recent years. 
  • Re-establishing distribution for the Treasury Premium Brands Australian sourced priority portfolio in China, including Rawson’s Retreat.
  • Expanding sales and marketing resources, and brand investment, in China.

TWE had spent more than 20 years building a presence for its brands in Mainland China where middle class consumers have been embracing wine. 

“This is a medium-term growth opportunity that we will pursue in a deliberate and sustainable manner, focused on growing our portfolio in China while continuing the strong momentum that we have delivered in several global markets over recent years,” concluded Ford. 

Meanwhile, Andrew Calabria, sales & marketing director of the Calabria Family Wine Group, described the abolition as “a significant development for the Australian wine industry”.

“As an Australian wine producer, we understand the immense challenges faced by our industry due to the imposed tariffs,” he said. “The past three years have shown the resilience and adaptability of our Australian winemakers, who have navigated the challenging market conditions.”

Calabria now plans to showcase its portfolio of Australian wines from the Riverina and Barossa Valley regions to Chinese customers.

“We look forward to once again delivering exceptional Australian wines to our valued customers and rebuilding trust in this significant market.”

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