Penfolds wine found in China and detained by customs as suspicion shifts to seller attempting to bypass tariffs

Despite crippling tariffs and a crackdown on Australian wine by China, the pricey favoured drop is still finding its way into the country as Chinese drinkers miss Penfolds, CEO reveals.

A Penfolds 2008 Special Bin 620 wine was launched in Shanghai, in 2011, at a cost of $1000 per bottle.

Treasury Wine Estates chief executive Tim Ford has confirmed that 80 cases of his winemaker’s luxury wine Penfolds were detained at Chinese ports last month as part of a crackdown by Chinese authorities on imported Australian wine coming into the country.

The maker of the famous Australian wine, which once poured into China as locals soaked up as much of the iconic wine they could get their hands on, has begun an internal investigation into where the Penfolds stock could have come from after it left its vineyards and entered its global sales chain.

Last year China imposed crippling tariffs of more than 200 per cent on Australian wine, including wine made by the nation’s biggest winemaker Treasury Wine, which all but shut down a market for Australian wine worth $1.3bn in annual sales.

However, some Australian wine is still finding its way into China and it has been revealed that 80 cases of Penfolds wine was detained by customs officials in Shenzhen.

It is believed the Penfolds wine had poor or incorrect labelling, might have been attempting to circumvent the tariffs by hiding its real country of origin, and was brought in by third party importers.

Treasury Wine Estates CEO Tim Ford. Picture: Aaron Francis/The Australian

On Wednesday at an earnings conference for Treasury Wine’s latest results, Mr Ford said he was aware of the customs issue and the detained bottles of Penfolds wine and that the company was investigating the matter.

He said it is likely that the wine didn’t come directly from its customers but it would seek to find where it had come from as it respected its relationship with China.

“We can trace that back and we can deal with it and the customers we can deal with it,” Mr Ford said. “It is important we manage that relationship with China.”

He later told The Australian that Treasury Wine was investigating the situation.

“We’re still investigating the specific instance and we do that every time we get only a handful of occasions in the last six months that we’ve been alerted to such things every time it certainly doesn’t come from Treasury Wine Estates and it doesn’t come from our customers who we sell to either.

“So once we trace back the volumes, which are always small, so it’s not a lot, not a big volume of wine, we find where it comes from and we can trace that right the way back through and then we deal with the customer who is part of that chain.”

While Australian made Penfolds is still sold in very small batches in China with the tariffs attached there is still a market for Penfolds branded wine the winemaker sources from its vineyards in the US and France.

“There is a significant demand for the brand Penfolds (in China), we know that, but you know, there’s other country of origin portfolios we’ve got to build to meet it because it is pretty clear we’re not waiting for Australian country of origin wine to come back into China.”

Mr Ford said it was important for Treasury Wine to manage the relationship with China, despite the trade war between China and Australia, and the company was working with Chinese customs.

“We will investigate it, we have got to maintain vigilance … it is relatively small and relatively infrequent when it does come to our attention. We want to maintain brand integrity and price integrity in China.”

At its peak and before relations between Beijing and Canberra cooled, Treasury Wine was one of the biggest exporters of wine to China led by huge demand for its Penfolds brand which was viewed by many wealthy and aspirational Chinese consumers as a luxury brand that sat comfortably beside other luxury fashion brands like Louis Vuitton, Gucci, Bvlgari and Cartier.