New Chinese rules delay Australian wine imports

New rules imposed by Chinese officials are delaying the clearance of Australian wine imports.

Australian Trade Minister Steven Ciobo, who is currently in Shanghai, said he had been informed of the situation by Treasury Wine Estates. 

“The questions being asked relate to certificates of origin. We will look at precisely what the situation is and if we can get to the bottom of it," Ciobo said.

New verifications and certification processes were introduced last month.

TWE CEO Michael Clarke revealed in a conference call yesterday that the company is “working with the Chinese authorities and officials, as well as Australian authorities and officials, to make sure we can meet these new and additional processes.

“They are not just being ­applied to Treasury Wines — they’re being applied to a number of other companies across a number of other industries from Australia," he added. “We don’t see any reason why this is going to be a long-term issue and we believe we can work through it.”

TWE has also informed Wine Australia about the bottleneck.

During his conference call, Clarke assured analysts and investors that the issues TWE was experiencing could be resolved.

"We don't see any reason why this is going to be a long term issue and we believe we can work through this," he said.

TWE dismisses China glut claims

TWE also told the ASX it is "comfortable with the sustainability of its operating model in China" following an Australian Financial Review report that claimed the company was facing a supply glut.

TWE assured shareholders it was building a portfolio of brands in China in a disciplined approach to managing inventory levels with its customers.

The AFR said distributors were having over-supply issues "mainly around Rawson's Retreat, Wolf Blass and some of the cheaper Berringer products".

However, in its ASX statement, the company said: "TWE cautions reliance on feedback from selected customers in China." 

In a conference call, CEO Clarke added that he believed the comments were made by sacked Chinese wholesalers in an attempt to force TWE to start resupplying them.

TWE had parted ways with wholesalers who had breached the company’s supply agreement, he said.

Clarke said the former wholesalers had been caught “flipping” cheaper wine brands to unauthorised wholesalers and stockpiling luxury brands such as Penfolds for future price gouging.

The company only sells “portfolios” — mixes of brands — and does not allow purchases of individual brands.

“In some cases they were flipping a brand to somebody else, trying to game our disciplined system,” Clarke said.

“We picked that up and we have terminated those parties. We think they are the parties that have talked to certain ­analysts and journalists.

“But that squeaky wheel is not going to get them back in the business. They get one chance, if they abuse that chance we will not work with them again. They’ve killed the goose that laid the golden egg. Tough luck guys.”

China accounts for half of TWE's sales in Asia and 80% of its growth in the region, according to Citi Research.