TWE China

TWE shares hit by China anti-dumping inquiry

August 18, 2020
By Alana House

Treasury Wine Estates shares went into a brief trading halt on the ASX this morning after China announced it had launched an anti-dumping probe into Australian wine.

TWE’s share price dropped by 14% at 11am when China’s Ministry of Commerce announced the anti-dumping investigation of Australian wine exports in China on Tuesday.

It follows the China Alcoholic Drinks Association making a formal application on behalf of the domestic wine industry in early July.

The association, which represents 122 members, said the growing number of low-priced Australian wines sold in China had “severely disrupted and inflicted a serious negative impact on the local market”.

It has asked the regulator to look into 10 Australian wine producers including TWE, Yalumba, Australian Vintage, Casella, Accolade Wines and Riverland Vintners.

The investigation applies to wine sold in containers holding two litres or less and will focus on allegations the Australian industry was dumping wine into China and receiving state subsidies.

Macquarie Bank said interim tariffs on Australian wine could be imposed as early as 60 days from the start of the inquiry.

Federal Trade Minister Simon Birmingham said the investigation was “a very disappointing and perplexing development” from its largest wine importer.

“Our wine industry has worked incredibly hard to establish itself as a world-leading producer and export powerhouse,” Senator Birmingham said.

“Australian wine is highly sought after in China because of its quality. Australian wine is not sold at below market prices and exports are not subsidised.

“Our government will stand with the Australian wine industry to uphold their integrity and hard earned reputation for producing wines in high demand throughout the world.”

TWE told the ASX: “TWE will of course co-operate with any requests that we receive for information from Chinese or Australian authorities.

“TWE has had a long and respectful relationship with China over many years through its team, partners, customers and consumers. 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.”

CEO Tim Ford later added: “This decision matters deeply to our business and the entire wine industry, both in Australia and China. We have played a long-term positive role in growing the wine category in China, and we will continue to take a leadership role as this issue plays out. We now roll up our sleeves and work with governments at all levels to resolve the situation.”

More than 40% of TWE’s profits are made in China.

In its FY2020 results released last week, TWE reported a 14% decline in EBITS in Asia to $243.7million, with volume lower through 3Q20 as key consumption occasions for wine were impacted by government mandated restrictions throughout the region.

However, TWE said “positive trends were noted” in 4Q20, with consumption and sales depletion recovery across the portfolio, particularly in June.


Australia is the number one imported wine category in mainland China and has performed better than its key competitors in the last year.

Import data from the Global Trade Atlas shows that Australia held a 37% share of the value of wine imported by mainland China in the 12 months ended May 2020, well ahead of France on 27%, Chile with 13% and Italy with 6%. While Australian exports increased, French imports fell by 36%, Chile by 26% and Italy by 12%.

Australian Grape and Wine said it believed the sector was well placed to respond to the investigation.

“Australia has a large number of exporters with close cultural ties to China,” it said.

“The Australian industry welcomes the opportunity to build on these ties and work with the Chinese industry and government to further technical co-operation and develop lasting relationships.”

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