Asia Markets

Shares of Australia's Treasury Wines fall on fears of 'retrospective tariffs' from China

Key Points
  • A pause of the Penfolds label spinoff comes as the troubled Australian winemaker faces troubles with China.
  • The call for retrospective tariffs comes amid an anti-dumping probe by China into imports of Australian wine.
  • The investigations will not change "our long-term commitment to China and we will continue to focus on building our brands in this market," Chief Executive Officer Tim Ford said in a statement.
Penfolds Grange red wines at a special re-corking clinic in Sydney, July 12, 2006.
Greg Wood | AFP | Getty Images

Australia's Treasury Wines Estates on Thursday put on hold a demerger of its most prized brand as its shares tumbled to a near five-year low amid concerns China would impose retrospective tariffs on Australian wine imports.

The pause of the Penfolds label spinoff comes as the troubled Australian winemaker faces more woes.

On Wednesday, after market close, the company said a Chinese drinks group has called for retrospective tariffs on Australian wine imports amid escalating trade and diplomatic tensions between Beijing and Canberra.    

The call for retrospective tariffs comes amid an anti-dumping probe by China into imports of Australian wine. China is the top market for Australian wine exports and is also Australia's largest trading partner.   

"The potential for retrospective tariffs is a bad sign for the pending anti-dumping investigation," Jefferies analysts said in a note.  "Importers may be unwilling to bear the risk of retrospective tariffs and could stop importing Australian wine until the investigation is over," they added.

Shares of the company tumbled over 9% in early trading to hit their lowest levels since January 2016. The company said it had not received any advice or notification from the Chinese authorities in relation to speculation about a potential embargo on Australian exports, including wine, into China.

"These investigations do not change our long-term commitment to China and we will continue to focus on building our brands in this market," Chief Executive Officer Tim Ford said in a statement.

The team is currently responding to detailed information requests by China's Ministry of Commerce on the issue, Ford added.

Treasury, which had said in April it might spin off the Penfolds label, said the planned completion of the potential demerger by the end of 2021 was no longer applicable.