June 13, 2018 / 10:18 AM / 9 months ago

Exclusive: Pernod Ricard wines delayed at Chinese ports amid strained ties with Australia - sources

SYDNEY (Reuters) - Wine shipments from Pernod Ricard’s (PERP.PA) Australian business have been held up at Chinese ports, two sources told Reuters, the first foreign company to be harmed by a deterioration in relations between Australia and China.

FILE PHOTO: A barman of French drinks maker Pernod Ricard group prepares drinks for clients at the " Club Pernod" in Marseille, France, April 27, 2016. REUTERS/Jean-Paul Pelissier

Six Australian wine companies have faced delays at Chinesecustoms since Prime Minister Malcolm Turnbull complained of Chinese political interference late last year, straining ties between the two trading partners, a senior government official said this month.

The listed French company Pernod Ricard owns the big-sellingAustralian wine brand Jacob’s Creek.

Australia has accused China of meddling in its domesticaffairs and is introducing foreign interference laws. China has denied any such activity.

“Pernod Ricard through its ownership of Jacob’s Creek hasbeen impacted by China’s restrictions,” said a government sourcebriefed on the issue, who declined to be identified as he is notauthorised to talk to the media.

Pernod Ricard’s head office in France acknowledged that there had been an impact but declined to go into details.

“We experienced some delays in China and we are actively working to resolve the issue,” a spokesman said. “Our business performance in the country is not impacted by this minor incident.”

In recent months, Treasury Wine Estates Ltd (TWE.AX) andMcWilliams Wines disclosed they were experiencing problems atChinese customs.

They and Pernod Ricard joined several other companies for anemergency meeting with government officials last week, agovernment source said, to urge the government to break theimpasse with China over trade restrictions.

China’s customs have not responded to faxes requestingcomment on the Australian complaints of delays.

Pernod Ricard, which manufactures and sells variousalcoholic drinks including Absolut Vodka and Martell cognac,does not publish sales records of Jacob’s Creek wines to China.

But this month, it said China accounted for about 9 percentof its global sales of 9 billion euros ($10.57 billion).

The Chinese delays have cast a shadow over an otherwisegolden period for Australian wine exports, which are forecast tobe worth more than A$1 billion in 2018, government figures show,compared with A$848 million ($641.43 million) last year.

Reporting by Colin Packham; Additional reporting by Pascale Denis in Paris; Editing by Robert Birsel, Clarence Fernandez and Alexandra Hudson

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