China’s Ministry of Commerce today announced the removal of tariffs on Australian wine into China, effective from tomorrow (29 March). The move comes as a major boost to Australian wine producers and for their sales prospects in China domestic and travel retail markets.
The move ends the restrictive import tariffs imposed more than three years ago. Before that, China was Australia’s largest wine export market with a value of around A$1.2 billion (US$782 million) a year.
Leading producer Treasury Wine Estates (TWE) said that “while it will take time to rebuild given the changing environment and consumer preferences, it’s still positive news for the Australian wine industry”.
TWE CEO Tim Ford said: “The removal of tariffs on Australian wine exports to China is terrific news and is cause for celebration across the Australian wine industry and with our partners and consumers in China.
“It’s testament to the continued stabilising of relations between both countries by the respective governments and the ongoing partnerships maintained between Australian businesses and our Chinese counterparts.
“Treasury Wine Estates has remained committed to China as demonstrated by our continued investment in the market through our local presence with more than 120 team members and partnerships contributing to Penfolds continued strong brand awareness in China. ”
He added: “This announcement signals the start of our ramp-up to re-establish our Australian luxury and premium wine distribution in China and it shouldn’t be too long before local Chinese consumers have more access to our great wines.
“It’s fantastic news for the Australian wine industry and opens the door for renewed opportunities for local winemakers and growers, particularly in regional Australia.”
In a note to investors Goldman Sachs said: “Whilst the tariff removal was widely anticipated amongst investors, its finalisation still provides a positive catalyst for the stock, in our opinion. Our recent channel checks with multiple industry sources suggests that there is strong reception by China distributors on the return of Australian Penfolds to the market and some have been ‘hoarding cash’ in order to pay for the Bins and Icons allocations.” ✈
