Penfolds in toast to top China talks
THE boss of Australian luxury wine brand Penfolds has held high-level meetings with the powerful Chinese drinks industry association that three years ago made damaging anti-dumping allegations against Australian winemakers – and which led Beijing to impose punishing tariffs that destroyed a $1.3bn export market.
The meeting last week between Penfolds managing director Tom King and peak industry body the China Alcoholic Drinks Association (CADA) could be further evidence of a gradual thawing of prickly trade relations between China and Australia that in 2021 caught Australia’s $45.5bn wine industry in the crossfire as crippling tariffs were placed on imported Australian wine.
At a meeting last week the Penfolds delegation, led by Mr King and Penfolds greater China sales manager Wu Mingfeng, were reportedly warmly greeted by officials at CADA where they were told that China welcomed quality wines to enter 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 saying in a CADA report following the meeting with Penfolds.
The convivial gathering at the offices of the industry body and upbeat comments from its executive director are highly symbolic given it was CADA in 2020 that requested the Chinese Ministry of Commerce launch separate antidumping and countervailing duties investigations on Australian wine in China.
In a brutal 117-page report, CADA listed pages of grievances against the Australian wine industry, accusing it of distorting the Chinese wine market and accepting a range of subsidies, grants and tax concessions from the Australian government that was causing “material injury” to the domestic Chinese wine industry.
The commerce ministry happily took up the CADA request and completed its investigations within a year. It then slapped damaging tariffs on imported Australian wine ranging from 116 per cent to 218 per cent that all but destroyed a billion dollar-plus market for Australian winemakers including Penfolds.
The tariffs were particularly damaging to Penfolds, owned by ASX-listed winemaker Treasury Wine Estates, as it was incredibly popular in China and helped drive the bulk of Treasury Wine’s annual profit growth.
But now a window could be opening to mend relationships between Beijing officials and the Australian wine industry, perhaps kickstarted by talks between Penfolds and CADA.
Mr King’s trip to China will soon be followed up by Treasury Wine chief executive Tim Ford, who will get a chance to visit the region for the first time since the outbreak of Covid-19 and meet with his own staff at the winemaker’s offices in Shanghai.