Treasury Wine Estates said demand for its products in China will be extremely limited and has outlined a raft of changes to operations after China put substantial levies on Australian wine exports.
Treasury on Monday said it would shift the distribution of its luxury wines from China to other countries, redirect grape sourcing and cut costs due to the levies.
China has imposed levies of up to 212 per cent on Australian wine exports, after claiming to have found the “dumping” of Australian wine.
Dumping usually refers to exporters selling products at greatly reduced prices, which can help win market share.
Treasury Wine Estates must pay a levy of 169.3 per cent of the imported value of its wine.
This requirement could last until August next year.
Treasury chief executive Tim Ford said there was no doubt the levies would have a significant impact on many across the industry, and cost jobs.
The company will shift the distribution of its Penfolds Bin and Icon range from China to countries where there is unmet demand.
It will also increase sales and marketing efforts in those countries.
Luxury grape sourcing usually done for Chinese customers will be allocated to other premium 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 two to three years.
Shares were lower by 8.13 per cent to $8.48 at 1418 AEDT.