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(Reuters) -Australia’s Treasury Wine Estates said on Monday it is well placed to rebuild its business in China, should tariffs by China of the country’s wine be removed, as signalled by the Australian government on Sunday.
The Australian government, which is currently rebuilding its economic ties with Asia’s largest economy, had said that an expedited review of tariffs on Australian wine into China will commence and is expected to take up to five months.
“Should tariffs be removed, these measures will be implemented sustainably and with the aim of growing the business in China,” the company said in a statement.
Some of the measures for Treasury Wine to build its China business include a re-allocation of a portion of Penfolds Luxury from other global markets back to China and to re-build its distribution for the Penfolds Australian entry-level luxury portfolios.
In February 2021, the company had planned a major overhaul of its business as it came under pressure from tariffs imposed by China on Australian wine, which included the likely sale of low priority brands and other assets.
The world’s biggest standalone winemaker used to derive a third of its profits from China, before anti-dumping and subsidy tariffs of up to 212% were imposed on Australian wine in late 2020.
“Beyond the COVID-19 pandemic, supply chain disruptions, and wildfires in California which reduced our access to luxury supply, the imposition of tariffs on Australian wine in 2020 effectively closed the China market,” the winemaker remarked in its annual report for FY23.
In the year ended June 2023, Treasury reported a 3.3% fall in annual profit, while flagging that it expects demand for luxury wine to grow globally this year, led by its Penfolds label, and with potential upside from improving relations between Australia and China.
($1 = 1.5835 Australian dollars)
(Reporting by Archishma Iyer in Bengaluru; Editing by Lisa Shumaker and Diane Craft)
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