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Australia’s Treasury Wine soars amid expectations of a China comeback, boosting investor optimism.

Australia’s Treasury Wine Eyes China Revival Amid Tariff Hopes

Treasury Wine Estates Aims to Rebuild Business in China

Australia’s Treasury Wine Estates (OTC:) expressed optimism on Monday about the potential removal of Beijing’s tariffs on Australian wine, signaling the opportunity to rebuild its business in China. The news resulted in a more than 5% surge in the company’s shares. The Australian government, working towards repairing economic ties with China, announced that the two countries had agreed to expedite the review process for the tariffs, which is expected to take up to five months.

Positive Outlook for Australian Wine Export Industry

Treasury Wine, the world’s largest standalone winemaker, stated in a press release that if the tariffs were lifted, it would implement sustainable measures to grow its business in China. Prior to the imposition of the tariffs in 2021, Treasury Wine generated a third of its profits from China. The removal of tariffs would be a significant boost not only for the company but also for the Australian wine export industry as a whole, according to analysts from Goldman Sachs.

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Strategies for Business Revival in China

Treasury Wine revealed its plans to revive its business in China by reallocating a portion of Penfolds Luxury from other markets back to China. Additionally, the company aims to rebuild distribution for the Penfolds Australian entry-level luxury portfolios. These strategies, if implemented, would aid in the recovery of Treasury Wine’s lost market share in China.

Market Response and Future Outlook

Following the positive news, Treasury Wine’s shares experienced a significant surge of up to 5.3%, making it one of the top gainers on the Australian stock exchange. As the broader market experienced a decline of 0.9%, the company’s shares remained resilient, ultimately closing with a 2% increase. Looking ahead, Treasury Wine anticipates that its operating profit in the year leading up to June 2024 will be weighted towards the second half, allowing for flexibility in response to potential future tariff reviews.

The potential removal of tariffs presents a promising opportunity for Treasury Wine Estates to rebuild its presence in the Chinese market. With its strategic plans in place and positive market response, the company aims to regain its foothold and capitalize on the growing demand for Australian wine in China.

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