NEWS
TWE CEO SAID DIVERSIFICATION TO ASIAN MARKETS AHEAD OF SCHEDULE
By Susan Lewis
12-5-2022
Source: Treasury Wine Estates
Australia’s leading wine producer and owner of the Penfolds brand, Treasury Wine Estates (TWE), said the group is ahead of schedule in diversifying to other markets in Asia as a strategy to beat China tariffs.
TWE Chief Executive Tim Ford told Australian media that he is working on the basis that the heavy tariffs imposed by China are permanent and the zero tariff they used to enjoy will not come back.
As part of its strategy to face the challenges created by the punishing 175.6 percent tariff slapped by China on TWE’s wines made in Australia, the company has pivoted to build up sales to other Asian countries such as Singapore, Thailand, Malaysia, Vietnam and India.
Ford said the group was ahead of its original diversification targets to sell wine originally destined for China to other Asian countries. “We’re ahead of where we thought we’d be,” he told Australian media.
TWE’s wine tariff to China is lower than most other companies, some of them have to pay tariffs as high as 218 percent.
Despite this, the punitive tariffs have seriously dented TWE’s export to China. The company’s China export value tumbled to just AUD2million (USD1.38m) in the six months ended 31 December, compared with AUD78.2m a year earlier.
Another strategy adopted by TWE is to circumvent Chinese tariffs by shipping wines made in other countries to China under the Penfolds brand.
“I spend zero time thinking about it (zero tariff) coming back,” Mr Ford said. “I spend 100 percent of my time on the country-of-origin strategy and the French, American and Chinese wines.”
Ford said the company’s strategy was built around the Australian export market to China being gone forever, and on fulfilling the demand for the Penfolds brand in China with country-of-origin Penfolds wines from France and the United States, which do not attract tariffs.
The company is also planning to eventually launch Penfolds brand in China using wines made in China.
(the writer can be contacted at: info@thewinechronicle.com)
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