In conversation with Treasury Wine Estates CEO Tim Ford

UTS:ACRI in partnership with the UTS Business School will host Tim Ford in this unique opportunity to hear first-hand from one of Australia's leading chief executives on his experiences with the PRC, having just returned from his first visit in three years. He will join Glenda Korporaal, UTS:ACRI Adjunct Industry Fellow and columnist for The Australian, to discuss how the economic links between Australia and the PRC survive amid the headwinds.

A few years ago, Australia was the biggest overseas supplier of wine to the People’s Republic of China (PRC). Australia's largest winemaker, Treasury Wine Estates (TWE), sold everything from the budget-conscious Rawson’s Retreat to the luxury brand Penfolds to an increasingly wine-interested PRC market that accounted for 30 percent of its profits.

But this all changed in late 2020 when Beijing imposed anti-dumping/subsidy tariffs of up to 212 percent on Australian vintages, part of a host of trade sanctions applied to Australian goods. The tariffs devastated many small companies. Indeed, in 2022, Australian wine sales to the PRC stood at just $12 million, down from $1.25 billion. Increased sales elsewhere amounted to less than one-tenth of the fall to the PRC.

Many thought TWE's new chief executive Tim Ford would be forced to abandon the company’s PRC ambitions. Instead, the company reinvented itself to keep supplying PRC consumers, sourcing from South Africa, the US and France, and investing in the PRC’s own wine industry. Last September, the company launched ‘One by Penfolds’, a new range featuring American and French wine as well as a ‘Made-in-China’ offering from the Ningxia region. Since the tariffs were imposed, TWE’s share price has, in fact, risen by nearly 50 percent.

Polling by the Australia-China Relations Institute at the University of Technology Sydney (UTS:ACRI) shows that 51 percent of Australians now consider the economic relationship with the PRC is ‘more of an economic risk than an economic opportunity’. In an era when geopolitics threatens commercial transactions with increasing frequency, what can the wine industry’s experience tell Australians about the costs and benefits of economic engagement with the PRC?