- Digital Wine Ventures (DW8) will scrap its wholly-owned Chinese subsidiary amid rising tensions between Australia and China and subsequent uncertainty
- China's tiff with Australia is now playing out in the wine industry with China imposing tariffs on Australian wine
- Meanwhile, DW8 has also announced that its WINEDEPOT business is expanding its addressable market to sell to corporate and business buyers
- CEO Dean Taylor says the company expects this expansion to capture oversupply from Australian producers due to the collapse of exports to China
- DW8 shares have been trading 4.9 per cent higher at 4.3 cents
Digital Wine Ventures (DW8) will close its Chinese subsidiary amid rising tensions between Australia and China and subsequent uncertainty.
China's tiff with Australia is now playing out in the wine industry, with China imposing tariffs between 107 and 212 per cent on some Australian wine.
As such, DW8 has decided to shut the doors of its wholly-owned Chinese subsidiary and instead focus its expansion efforts on other markets, notably the U.K., U.S., Canada, Europe, New Zealand and Singapore.
Every year Australian wine producers export around $1.2 billion worth of product to China. While the imposition of tariffs will have major implications for Australia's wine industry, DW8 CEO Dean Taylor believes it could provide a tailwind for the WINEDEPOT business.
"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," Dean stated.
"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."
DW8 has also announced that its WINEDEPOT business will expand its addressable market by selling to corporate and business buyers.
"Up until now, the focus of our Marketplace has been servicing trade buyers such as restaurants, bars, hotels, bottle shops and other licensed venues who often have very particular delivery requirements. However, we’ve recognized that the platform and fulfilment infrastructure that we have developed is also well suited to servicing corporates and businesses that purchase in larger volumes as well."
"We see the push into this segment as an excellent way to provide the producers that we are working with another way to help clear the expected oversupply of inventory stemming from the overnight collapse of the Chinese wine export market."
DW8 shares have been trading 4.9 per cent higher at 4.3 cents at 11:44 am AEDT.