(Bloomberg) -- Treasury Wine Estates Ltd. is planning to reallocate a portion of its Penfolds Bin and Icon wines from other global markets to China once Beijing lifts crippling tariffs on Australian exports.

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China remains the single greatest opportunity for the company should it re-open its doors to Australia, Chief Executive Officer Tim Ford said on an investor call Thursday for the company’s first-half report. The market accounted for about 30% of Treasury’s earnings prior to the implementation of levies.

Beijing is conducting a review into the tariffs on Australian wine and it’s widely expected those levies will be removed next month. Treasury said last year that the company could quickly ramp up exports of bottles priced in the A$30 to $40 ($19 to $26) range, including Penfolds Max’s, should duties end.

“We’re confident that China does remain an attractive luxury wine market for our brands and a significant growth opportunity for Penfolds over the long term,” Ford said. “If we get back in and re-establish Australian wine, that’s a re-establishment for the next decade and beyond.”

Global demand is exceeding supply for some Penfolds wine including Bin 407, which costs about A$120 a bottle, so reallocating to China is a strategic choice for long-term growth, Ford said in an interview. In 2019 — prior to the pandemic and tariffs — Treasury sold 600,000 cases of Bin and Icon wines in China, he added. The brands are priced between A$60 to A$1,000.

Australia’s wine trade with China was worth more than A$1 billion in 2018-19 and 2019-20 before the tariffs, which were implemented during deteriorating ties between the nations. Some levies were as high as 218%.



Treasury, which also has a China-made wine, plans to expand its sales and marketing team based in the Asian country working on global wine portfolios, Ford said. The group currently consists of 120 people, he added.

Treasury reported an 11% decrease in net income for the first half on Thursday, driven by a decline in its Americas and Premium brands. The company’s shares rose as much as 5.1% before paring some of those gains to trade 2.6% higher as at 2:52 p.m. in Sydney.

--With assistance from Georgina McKay.

(Updates with additional CEO comments in paragraphs 4 and 7.)

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