The announcement has sent the share price of Treasury Wine Estates, Australia’s largest wine company, into freefall, shedding almost 20 per cent of its value in the opening hours of trade this morning.
China’s Ministry of Commerce said this morning it had begun an anti-dumping investigation into imports of wine from Australia following a request from the China Alcoholic Drinks Association on behalf of the domestic industry last month.
According to news agency Reuters, the anti-dumping probe will look at imports of wine from Australia in containers holding two litres or less in 2019, the ministry said in a statement on its website, adding that it would also investigate any damage done to the Chinese wine industry from 2015-19.
China is Australia’s largest wine export market with $1.2 billion worth shipped last financial year. South Australia is responsible for 50 per cent of Australian production.
TWE, the producer of iconic SA brands including Penfolds, Wynns and Wolf Blass, announced to the Australian Stock Exchange this morning it would co-operate with any requests for information from Chinese or Australian authorities during the probe.
The announcement has caused TWE shares to lose 18.5 per cent, falling from $12.34 to $10.06 this morning. The share price recovered slightly to be $10.79 at 2pm.
“TWE has had a long and respectful relationship with China over many years through its team, partners, customers and consumers,” its statement to the ASX said.
“As an importer of high-quality, premium Australian wine, including brands such as Penfolds, TWE remains committed to China as a priority market and will continue to invest in its Chinese business and its relationships with customers and consumers.
“TWE’s focus will remain on building premium and luxury brands, investing in the local operating model and team, and working with partners to enhance the wine category and grow our contribution to China.”
In May, China imposed an 80 per cent tariff on Australian barley following an anti-dumping investigation.
Treasury Wine Estate last week reported a 25 per cent fall in net profit for the 2020 financial year following challenging conditions in the US and the global COVID-19 pandemic.
Australia’s largest wine company returned a net profit after tax of $315.8 million.
Federal agriculture minister David Littleproud vowed to defend the Australian wine industry.
“While we respect the right of any nation to defend their domestic producers from unfair and uncompetitive trade practices, we reject any claim that Australian wine product has been ‘dumped’ into China,” he said.
“I note that this anti-dumping investigation will run for up to 12 months, and I am committed to working with the Australian wine industry to ensure that all necessary information is provided to refute any claim that Australian wine is being dumped.”
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