Undeterred by China’s crippling tariffs on Australian wines, Australia’s biggest wine producer, Accolade Wines, is exploring a few alternatives to sidestep the tariffs including shipping wine from Chile and allegedly eyeing wine production inside northwestern China.
Accolade Wines, owner of popular brands Hardys and Petaluma, is allegedly scoping vineyard sites inside mainland China to bypass up to 218% punitive tariffs China imposed on Australian wines for a period of five years.
Last month, the wine group’s China team led by Peter Dixon, Managing Director of Asia & Global Travel Retail, visited northwestern Qinghai province on Tibetan plateau to inspect vineyards and wine production.
The group was greeted with a high-level reception by local government. Dixon was received by Qinghai’s head of commerce department, Zhu Longxiang.
In an announcement Qinghai Department of Commerce posted on its official website, it say Accolade Wines aims to make a “strategic investment” in Qinghai’s Baojialong Winery to “jointly promote brand promotion and expand production scale.”
However, when reached by Vino Joy News, the company denied the report by Qinghai government.
“This was a pure business tour for learning better the local wineries in China. We are not planning to invest in partnership with the Chinese winery to promote both brands and to expand wine production,” the company’s PR Manager for Asia, Adrian Liu, replied to us by email.
It’s not clear what caused the contradiction between Qinghai government and Accolade team and it’s unusual for local government to release statement before any official deals are inked.
However, the Australian company admits that they are exploring other opportunities for collaboration inside China.
“We are open for any potential opportunities of cooperation with local partners in China in different forms, but I could not agree this interpretation of our intention from that report,” he added.
Different Route to China & IPO
China’s crippling tariffs have prompted Australian wine giants like Accolade and its arch rival Treasury Wine Estates to seek quick remedies to buffer the blow.
TWE, owner of popular brands such as Penfolds and Wolf Blass, previously said it is looking at building a production site inside the country and last month the wine giant was in China’s premier wine Ningxia on a similar scouting visit.
Since China announced the anti-dumping tariffs of 212% last November, Australian wine exports fell over 95% from December to March, as we have reported.
For Accolade, the company told Financial Times that it would ship wines from Chile and elsewhere to China to circumvent the 167.1% tariffs levied on the company, which is lower than the 218% imposed on most Australian wines.
The choice of Chile is largely because Chilean wines enjoy zero tariff to China thanks to a joint Free Trade Agreement.
Additionally, the company is planning an IPO possibly in Hong Kong, according to its CEO Robert Foye, who like Dixon previously worked for TWE.
“I want to do an IPO. And that is what we are going to do at Accolade Wines. So we are going to do that in the next two to three years either on the Australian Stock Exchange or actually I’d like to do it on the Hong Kong stock exchange,” Foye was quoted as saying.
Accolade bought by private equity firm, Carlyle Group, in 2018 generated AU$1.2 billion last year in turnover, and forecast a 25% growth in earnings in the year to June.
