The Chinese Ministry of Commerce (MOFCOM) had, on 27 November 2020.announced provisional anti-dumping measure (Provisional Measure) on imports of certain categories of wine from Australia into China. This drove almost all wine companies in Australia to implement alternate plans to reduce the impact of this step.
China, recently announced its decision to lift anti-dumping and anti-subsidy tariffs on Australian wine from March 29. The tariffs, of up to 218.4%, were imposed in March 2021 for a period of five years. Prior to that, Australian wines imported into China were subject to zero tariffs, subsequent to the signing of a free trade agreement in 2015. The agreement had provided a 14% tariff advantage to Australia over many other wine-producing nations
A welcome news indicating improving relations between two countries, it is likely to give a boost to Australian Wine Companies, since China was Australia’s biggest export market. However, China has put into action a number of regulatory changes in recent years, which may affect the export of wine to China.
Here are Three Companies into Wine Business looking Promising
Treasury Wine Estates Limited (ASX: TWE)
Treasury Wine Estates Limited anticipates that consumer trends in the wine categories will mostly hold steady, with consumers' preferences continuing to move away from commercial wine, premium wine remaining resilient, and luxury wine demand continuing to be strong in important markets. Following the acquisition of DAOU, the company's long-term financial goal remains to achieve high single-digit average earnings growth, sustainable top-line growth, and a target consolidated EBITS margin in the high 20% range.
This goal will be supported by the portfolio's ongoing premiumization, distribution expansion, increased demand for TWE's priority brands, and availability of those brands, cost reduction, and innovation that leads its category and is driven by consumers. Moreover, with the relief from China, TWE will now commence collaborating with its customers in China to implement the detailed plan outlined.
Lark Distilling Co. Limited (ASX: LRK)
LRK, because of the slowdown in the traditional Chinese indirect export channel and lower limited-release sales in domestic channels had faced a negative impact on the company's sales performance.
LRK is progressing well with its Southeast Asian distributors. Additionally, agreements have been reached with distributors in Malaysia and the Philippines, and Indonesia has moved to the stage wherein a distribution agreement is being finalized.
The company has three primary strategic priorities that include building long-term brand value, accelerating international sales and maintaining domestic leadership, and practising cash and capital discipline.
Australian Vintage Limited (ASX: AVG)
AVG has its focus on maintaining its position as a market leader in the no-and-low wine segment in both Australia and the UK. It has plans to release new products specifically designed for the upcoming ABV tax in the UK. With the reopening of the Chinese market, it looks forward to working closely with its key distributor, COFCO. It is also working on reducing its inventory to improve operating cash flow in the second half, with plans to lower shipping to the UK and take advantage of potential lower sea freight prices.
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