Treasury Wine Estates (TWE) will implement a number of plans to mitigate the impact of Chinese tariffs on Australian wine exports

With the new system, the Treasury Department’s exports will be weakened with a 1693 percent tariff for containers under two liters, possibly by May 28 August 2021

The punitive tariffs were introduced on allegations of “dumping” in which the Chinese authorities accused Australian manufacturers of marketing their product at anti-competitive below-cost prices

The ultimate determination of the anti-dumping investigation will determine whether the measure will be maintained, adjusted or removed

TWE says it will continue to work respectfully with China’s Ministry of Commerce (MOFCOM) “as part of the ongoing investigation”

As long as the measure remains in place, the Treasury Department expects that demand for its portfolio will be severely affected

Tim Ford, the company’s CEO, said it was up to the government to find a way out of the crisis

“We are extremely disappointed to find our business, our partners’ businesses and the Australian wine industry in this position,” said Tim

“We will continue to work with MOFCOM as the investigation progresses to ensure our position is understood. We call for strong leadership from governments to find a way forward,” he added

The Australian wine industry was devastated by news that it was essentially denied access to its second largest market by volume, valued at around $ 1 billion annually

The Treasury Department was forced to work out a plan to mitigate the effects of the punitive measures

While the wine giant is making plans to offset the worst of the effects, it has apparently been shaken by the actions and possible future effects of the ongoing trade war with China

As long as diplomatic relations with Australia’s largest trading partner remain strained, local exporters will be kept up to date and not know what action might be taken next or how long it will take

Various markets are currently affected, including seafood, wood, coal and beef It is not yet clear how long the effects will last or whether a solution can be found

Accordingly, the Treasury Department has drawn up plans to immediately reallocate the products destined for China and then “gradually realize their full potential over a period of two to three years” “

The first on the list is the diversion of the Penfolds Bin and Icon range from China – which currently accounts for 25 percent of sales – to other luxury markets in Asia, Europe and the USAS

The company is also committed to streamlining its business operations by lowering shipping and overhead costs in its global operations

The company assumes that the benefits of the plans will be minimal in the current fiscal year, but that a more stable and diversified model should be deployed in the future if the disruptions persist

The company says it is “happy with its existing inventory position and valuation” and will make the most of its flexible sourcing model to accommodate the now limited demand for its product

Tim Ford says the Treasury Department will do everything it can to support the sector during this time of uncertainty

“The strength of our brands, including Penfolds, combined with our diversified business model will allow TWE to implement a number of changes and plans that will enable us to address the significant impact of these moves going forward,” said Tim / p>

“However, there is no doubt that it will have a significant impact on many in the industry, cost jobs, and damage regional communities and economies that are the lifeblood of the wine sector”

“We will continue to work with our valued partners to better understand the implications and ways in which we can work with industry, governments and others to support the sector,” he added

Treasury Wine Estates is down another 596 percent this morning at $ 868 at 10:47 am AEDT

TWE ASX

World News – AU – Treasury Wine Estates (ASX: TWE) are looking to other markets to offset Chinese tariffs – The Market Herald

Source: https://themarketherald.com.au/treasury-wine-estates-asxtwe-eyes-other-markets-to-offset-chinese-tariffs-2020-11-30/