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Australia's leading wine producer says sales to China have evaporated since Beijing imposed strict tariffs on Australian wine imports but buoyant demand elsewhere helped avert disaster.
Treasury Wine Estates, the makers of Penfolds, on Tuesday posted a 7.5 percent year-on-year decline in net profit in the six months to December 31, citing China's tariffs on Australian wine and the impact of the pandemic.
The wine giant's sales to mainland China crashed to Aus$2.0 million (US$1.4 million) from Aus$78 million a year earlier.
However chief executive Tim Ford said Wednesday the company's "strong performance" in other markets -- particularly Malaysia, Singapore and Thailand -- had somewhat offset the decimation of its business in mainland China.
The Chinese government brought in strict tariffs on Australian wine -- badged as an anti-dumping initiative -- after a bitter war of words between the two countries spilled over into their trade relationship, with beef, barley, coal and other key exports also targeted.
Before the tariffs, Chinese sales made up 41 percent of Australian wine exports at the peak, prompting fears the trade war could devastate Australia's wine industry.
The World Trade Organization is currently examining a complaint from Australia about China's duties of between 116.2 and 218.4 percent on Australian wine.
Treasury made clear Tuesday it did not believe China would lift the wine tariffs in 2022, but said it was confident it could weather the situation.
"Levels of wine exports to other markets remain strong," Chief Financial Officer Matt Young said Wednesday on the company's earnings call.
Treasury also used its half-year earnings announcement to highlight some innovations that were proving profitable, such as a non-fungible token of a rare wine priced at US$130,000, which sold out in 12 seconds.
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