The Company is pleased to advise investors that its principal operating business, WINEDEPOT has zero exposure to Australian wine exports to China, following the Chinese government’s recent decision to impose tariffs of between 107% and 212% on Australian wine.
Given the material uncertainty and sovereign risk posed by recent developments in China, market, the Company will prioritise its international expansion focus in other major markets for Australian wine such as the UK, USA, Canada, Europe, New Zealand and Singapore and close its wholly-owned Chinese subsidiary.
Digital Wines CEO Dean Taylor is concerned about the impact that these tariffs will have on the Australian wine industry but believes that the need for affected producers to clear excess inventory within the local market will provide further tailwinds for the Company.
“China currently imports about $1.2 billion of Australia wine each year. One of the key drivers of the growth of this market was the China-Australia Free Trade Agreement, which provided Australian producers a significant competitive advantage over other wine producing nations through reduced taxes and duties.”
“The tariffs now imposed will triple the price of some Australian wines, which undoubtedly have a significant impact on their competitiveness in that market. As a result, there’s going to be millions of litres of wine that will need to be sold in other markets.”
“This should be extremely beneficial for WINEDEPOT as the affected producers look for new routes to market. Along with the rapid switch to online buying due to COVID-19, this oversupply of inventory provides the perfect storm to launch our Direct-to-Trade marketplace.”