Treasury Wine Estates said demand for its products in China will be extremely limited and outlined wide-reaching changes to its business after the Chinese government put substantial levies on Australian wine exports.
Treasury chief executive Tim Ford on Monday said he and his colleagues were extremely disappointed to find themselves and the industry in the situation.
He said there was no doubt the levies would have a significant impact on many across the industry, and cost jobs.
China accounts for 30 per cent of Treasury’s earnings, so executives have devised a plan to minimise the financial hit.
The company will move the distribution of its luxury Penfolds Bin and Icon range from China to countries where there is unmet demand for luxury wine.
It will also increase sales and marketing efforts for those products.
The sourcing of grapes for luxury wines, usually done for the Penfolds products, will be redirected to other premium Australian brands, such as Pepperjack, Seppelt, Wolf Blass and Wynns.
The company will also reduce costs across the globe.
Mr Ford said the benefits of these changes would be limited this financial year, but reach their potential over the next two to three years.
China last week declared levies of up to 212 per cent would be introduced for Australian wine exports, after claiming to have detected Australian wine being “dumped” on the market.
Dumping usually refers to exporters selling products at greatly reduced prices to gain market share.
Treasury Wine Estates must pay a levy of 169.3 per cent of the imported value of its wine.
Chinese authorities have imposed additional costs while they investigate.
Under Chinese regulations, the anti-dumping levies will be imposed until at least March 28, and could be extended until August.
Treasury, and Australian government officials, are trying to negotiate an easing of levies.
Mr Ford said staff would continue working with Chinese customers to show their long-term commitment.
He believed the diversified nature of the business would help it manage the impact of the levies.