By Andy Young

After a couple of difficult years, Treasury Wine Estates (TWE) is now growing in China, and the company is hoping to take advantage of the recently signed free trade agreement.

As reported in TheShout last week, the new Australia-China FTA is expected to see wine tariffs come down to zero within four years, which is great news for TWE and other Australian wine producers who have an eye on China.

In a recent interview with The Australian Financial Review, TWE's new managing director for Asia, Robert Foye, said that the company had implemented changes which had helped it turn around its fortunes in China and start experiencing growth in the market.

"We started with a low base that was uncompetitive so we are changing everything," Foye told the AFR. "It's going faster than we thought, the move to the new model, the turnaround.

"We are definitely growing a lot faster than market. If that overall market grows at 6 per cent, there is no reason why we can't grow at 15 to 20 per cent."

In response to some of the challenges it faced in China, TWE last year took back control of its sales and marketing from its China distributor. This has helped the company reduce its prices and improve its profit margin. The other tactic TWE will employ, according to the AFR, is to put corks back into its mid-range and premium wines across Asia. The Chinese market in particular still believes that luxury products use cork.

Foye added that he hoped these tactics will increase the significance of China to TWE. 

"In five years in terms of revenue and profit China should be [our] number three market," Foye said. "In terms of volume China is a small part of the business, but it has the highest margins and the best growth."

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The Shout Team

The leading online news service for Australia's beer, wine, spirits and hospitality industries.

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