The two companies, the only listed wine companies on the ASX, have seen their share prices impacted by punitive tariffs on wine imports from Australia. Despite Treasury Wine Estates' (ASX:TWE) successful expansion into other markets through a radical business reshaping, their share prices have been depressed.
On Friday, TWE shares closed at $11.77, up 3.25% for the week in anticipation of a tariff deal. Meanwhile, Australian Vintage, a much smaller player, saw its shares close at 38 cents on Friday, up 2.7% for the week.
TWE shares were at $16.94 before the pandemic hit in early 2020. A combination of tariffs and issues in the US market caused them to drop to under $US9 by November of that year. They rebounded to a recent peak of $14.34 in February 2023, fueled by hopes of tariff removal, which did not materialize.
At TWE's recent annual meeting, CEO Tim Ford revealed that the company had decided to hold back premium wines, particularly Penfolds, in anticipation of tariff removal. He stated, "This is a specific strategy in light of the potential for a future review of tariffs on Australian wine in China."
China initially imposed tariffs in early 2020, reaching up to 200%, as part of a series of anti-Australian measures in response to allegations about the origin of Covid. These tariffs were a major trade impediment for Australian exports, alongside bans on coal, seafood, wine, barley, and beef.
Prime Minister Anthony Albanese announced a deal for a five-month-long review, coinciding with his planned visit to China. Reports suggest that this change in China's stance followed the draft report on Australia's complaint about the tariffs to the World Trade Organization.
Albanese noted that since the removal of the 80.5% barley tariffs, the government had been working towards resolving the wine dispute through the WTO. The deal will see China conduct an "expedited" review of the wine tariffs over five months, with the WTO dispute suspended during this period. If the tariffs are not lifted at the end of the review, Australia will resume its actions in the WTO.
"I welcome the progress we have made to return Australian products, including Australian wine, to the Chinese market. Strong trade benefits both countries," Albanese said.
This announcement follows the return of Australian journalist Cheng Lei, who had been held by China on national security charges for three years due to breaching a government embargo on an official announcement by just four minutes.
