Like many Australian producers, Treasury Wine Estates welcomed Sunday’s announcement that a review will commence of China’s tariffs on Australian wine. In an ASX release, the company detailed its intended path forward if the review sees tariffs removed.

Since the application of tariffs on Australian wine in November 2020, TWE has retained sales and marketing leadership in China, as well as continuing to build its industry and customer relationships through the ongoing growth of multi-country of origin products, including the first Chinese sourced and produced luxury Penfolds wine.

According to the ASX announcement, TWE is “well placed to rebuild business in China, should tariffs be removed at the end of the review period.”

In the instance of a removal of the tariffs, the company outlined its plans to rebuild business in China, which include continuing its multi-country of origin portfolio, further investing in sales and marketing resources within China, and rebuilding distribution for labels such as Rawson’s Retreat and One by Penfolds.

The company says it will continue its multi-country of origin portfolio growth strategy, led by Penfolds’ French, US and Chinese portfolios, and will re-build distribution for its entry level luxury portfolios in China– including Penfolds Max’s, Koonunga Hill and One by Penfolds. The company also plans to rebuild distribution for the Treasury Premium Brands Australian priority portfolios in China including Rawson’s Retreat.

A portion of Penfolds Luxury and Icon tiers from other global markets will be reallocated to progressively re-build distribution in China while maintaining momentum in those other markets.

The release noted the age of release of these wines will be between three to five years, acknowledging, “Incremental sourcing for Penfolds Luxury and Icon tiers to meet existing and future demand.”

To re-build the distribution footprint of Penfolds, TWE will further invest in sales and marketing resources within China.

TWE will continue to apply its globally standardised margin structure to Penfolds sales globally, to ensure long-term brand health and price integrity, to ensure that sales prices and margins from luxury wine are materially consistent in all markets.

Should tariffs be removed, the company said these measures will be implemented “sustainably and with the aim of growing the business in China, but not at the expense of the long-term growth opportunity in other key markets.”

Promising step forward

Third generation family winemakers The Calabria Family are also hopeful following the news of a tariff review.

Andrew Calabria, third generation family member and sales and marketing director of the Calabria Family Wine Group, said that the announcement “brings a renewed sense of hope for Australian winemakers and grape growers.”

“As a fellow Australian wine producer, we understand the immense challenges faced by the industry due to the imposed tariffs,” he said.

“We commend all wine industry organisations involved for their efforts in reaching this positive development. We are grateful for the chance to have our wines potentially regain access to this important market. We remain committed to producing exceptional wines and delivering the utmost quality to our customers worldwide.”

The Chinese market has always been of great importance to the Australian wine industry, with exports valued at over $1 billion before the tariffs were implemented. However, these tariffs have caused a drastic decline in exports, with the value plummeting from 1.2 billion to $12 million.

“At Calabria Family Wine Group, we recognise the significance of the Chinese market and the impact it has on our industry. The imposed tariffs not only affected our company but also led to the loss of valuable relationships with our Chinese buyers. We are eager to rebuild those connections and regain the trust and support of our customers.”

The company said it looks forward to the outcome and remains optimistic about the future of Australian wine in China. “Together, as an industry, we will continue to stand strong, adapt, and seize every opportunity that comes our way,” said Calabria.

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