Thursday 15 November 2018

‘Country of Honour’ Australia Hit by Shipping Delays in China

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Chinese authorities have slowed down the clearance of imported Australian wine into the country and no one – including Wine Australia – seems to know why.
The slowdown comes just weeks after Wine Australia revealed that Australia wine exports to China (including Hong Kong and Macau) increased by 51 percent for the year to March 2018 to reach $1.04 billion – a first for exports to a single country.
And Australia is the Country of Honour at Vinexpo Hong Kong starting on 29 May.
Treasury Wine Estates (TWE), which is one of the companies affected by the shipping slowdown, released this statement on Thursday: “TWE confirms it is experiencing delays for some of its Australian Country of Origin shipments being cleared by the General Administration of Customs China (GACC) to replenish its inventory levels.
“As always, TWE continues to respectfully co-operate with authorities and relevant agencies in China to meet all regulatory requirements. The company is seeking greater understanding of new and additional verification requirements which have been applied since April 2018, and seemingly appear to only apply to Australian Country of Origin wines, and to Australian exporters operating ‘warehouse models’.
“TWE is an approved Trusted Trader by the Australian Border Force (Customs), which is recognised by GACC and has no reason to believe that this slowdown will be a long term issue.
“TWE continues to engage with a number of senior Australian government officials, including the Minister for Trade and Investment, the Department of Foreign Affairs and Trade, the Department of Agriculture, the Australian Border Force, and Wine Australia, as well as local industry bodies including the Winemakers’ Federation of Australia to address the new and additional verification requirements.”
Wine Australia told The Weekend Australian that it was talking to TWE to help it clear the way for a return to normal shipments.
“Aside from Treasury Wine Estate’s statement, we’ve had no formal advice of delays,” the statement says.
“We are working with TWE and other government agencies to address this apparent issue.”
John Casella and Darren De Bortoli both told The Australian they had experienced shipping delays in China in recent times.
The Australian reporter Eli Greenblat said: “Treasury Wine Estates, Australia’s biggest winemaker and one of the biggest wine groups in the world, has alluded to complications around export certificates that specifically apply to wines that have Australia as its country of origin.
“Others believe the tightening has something to do with label changes required on wine bottles and others view the shipping blockages as a political reaction by Beijing to Australia’s close alliance with the US, or our condemnation of China’s grab for islands in the South China Sea or some other diplomatic slight.”
Meanwhile TWE has come under fire over a supposed glut of low-end wine in China. The company has moved to hose down concerns.
In response to media reports, Treasury Wine Estates Limited (TWE) confirms the Company is comfortable with the sustainability of its operating model in China, to build a portfolio of brands, and of its disciplined approach to managing inventory levels with its customers.
Discipline and sustainability remain the cornerstone of TWE’s growth in North Asia (and globally). The Company actively monitors shipments, depletions and stock levels of its retail and distributor partners.
TWE cautions reliance on feedback from selected customers in China. The Company’s disciplined and rigorous approach to working with customer partners to sell a portfolio of TWE’s wines, a s it does in every region around the world, may underpin motivations for underperforming customers, who are not growing with the Company, to comment publicly.
“The benefits of our global operating model means that we can allocate luxury wines across regions, channels and fiscal years. This ensures brand scarcity is preserved and luxury wine benefits from further maturation. Therefore , we have flexibility as to when and where this wine is sold in the short to medium term.
“TWE management remains focused on executing and embedding important route to market changes in the United States, at the same time continuing positive earnings momentum in ANZ, Asia and Europe.”
• Further reading – https://www.businessinsider.com.au/treasury-wine-estates-michael-clarke-ceo-share-price-china-2018-5
WBM has published a 20-page report on China in the May-June issue. To subscribe visit www.wbmonline.com.au/shop
Photo: Vinexpo Hong Kong.
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