TWE meets with Chinese trade officials

Treasury Wine Estates has confirmed that Penfolds managing director Tom King and the China Alcoholic Drinks Association (CADA) met last week.

It was CADA that requested the Chinese Ministry of Commerce launch anti-dumping and countervailing duties investigations on Australian wine in China in 2020. The move led to duties in the range of 116.2% to 218.4% being applied to Australian wine for five years from 28 March 2021. 

A spokesperson for TWE told The Australian King’s visit to China last week with Penfolds winemaker Matt Woo included customer meetings, staff meetings with the Shanghai team and discussions with CADA on their long-term collaboration.

The Australian said the Penfolds delegation, led by King (above) and Penfolds greater China sales manager Wu Mingfeng, was “reportedly warmly greeted by officials at CADA where they were told that China welcomed quality wines into the country”.

“The Chinese market is an open market and quality wines are welcome to enter China to meet the needs of the majority of consumers in their pursuit of a better life,” CADA executive director Wang Qi was quoted as saying in a CADA report following the meeting with Penfolds.

King’s trip to China will soon be followed by TWE CEO Tim Ford visiting the winemaker’s offices in Shanghai.

Ford told analysts during a presentation of the company’s 2023 half-year results that he was preparing to make his first post-COVID-19 trip to China in March.

He said a locally made version of Penfolds, One By Penfolds, was delivering sales ahead of expectations. It features grapes from the Ningxia region and retails for around $50 per bottle.

“The consumer embraced it, definitely we’re going to expand,” he said.

Ford said even if trade sanctions were lifted now, it would take several years for TWE to fully rebuild its China wine volumes. Around 600,000 cases – it was previously exported by TWE to China.

“For our higher end luxury wines, it would take three years because we have to go and source more grapes,” he said.

“So if you make it this year, you don’t sell it for another three years. It would certainly take us time to increase the makes of those wines … because we’ve done such a good job of reallocating what was going to China a couple of years ago.”

One By Penfolds was another topic of discussion at last week’s meeting between TWE and CADA.

According to reports from CADA, executive director Wang said the organisation hoped TWE would “introduce more of China’s premium wines to the world” in the future.

Strategic co-operation will see TWE and CADA work together to build China’s wine industry, sharing technical expertise and brand support to develop world-class quality, integrity, and valuation systems for Chinese grapes and wine.

“If any counterfeit or shoddy products flood into the Chinese market, disrupt the market order, infringe on consumers‘ rights and interests, and harm the healthy development of China’s wine industry, the CADA will fully co-operate with the initiatives of the relevant state departments,” CADA said.

Strategic co-operation and “ways to enhance the international reputation and influence of Chinese wine” were reportedly discussed, including China Wine’s IP, campaign, and business environment of China’s wine regions including Ningxia and Shangri-la.

CADA also said it would act to protect Penfolds and other Australian winemakers from counterfeit wines in the Chinese market.

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Categories: Business, Uncategorized