Australia’s leading wine producer, Treasury Wine Estates, has successfully found alternative markets to substitute its loss in exports to China, which was once its largest overseas market that contributed almost 30% of its global earnings.
The war on tariffs on Australian wine has hurt Treasury Wine Estate (TWE), the producer of Penfolds, and this has resulted in the company posting a 7.5% year-on-year decline in net profit in the 6 months ended 31 December 2021. This was further exacerbated by the pandemic. Indeed, TWE sales to mainland China crashed to only A$2 million (US$1.4 million) from A$78 million (US$54.7 million) a year earlier.
Fortunately, the lacklustre performance in China is offset by stronger performance in other markets particularly in Malaysia, Singapore and Thailand.
China used to be the largest market for Australian wine exporters as it contributed around 41% of all Aussie wine shipments. This contribution has now come close to nadir with the imposition of strict tariffs on Australian wine in end-2020, which China claimed to be an anti-dumping measure.
The World Trade Organisation is currently examining a complaint from Australia about China’s duties of between 116.2 and 218.4 percent on Australian wine.