The Treasury Wine Estates Ltd (ASX: TWE) share price is up 0.4% in late morning trade on Monday.
Shares in the S&P/ASX 200 Index (ASX: XJO) global wine company closed on Friday trading for $12.94. Shares are currently changing hands for $12.99 apiece.
This comes despite an unexpected increase in taxes on wine in the United Kingdom.
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What new taxes is the UK imposing?
The Treasury Wine share price is shaking off concerns that the latest tax to hit the company's UK wine exports could materially impact its second-largest international export market after the United States.
Treasury Wine is still recovering from Chinese tariffs of more than 200% slapped on Aussie wine imports in 2020. That came amid diplomatic disputes with the Australian government.
The new 10% tax increase in the UK applies to all wines. But it still could impact British demand for Australian vintages. And it comes atop a UK tax charged in accordance with alcohol content that comes into effect in August.
Britain's Wine and Spirit Trade Association (WSTA) chief Miles Beale said the combined taxes would negate any price benefits delivered by the free-trade agreement (FTA) between Australia and the UK.
According to Beale (quoted by The Australian Financial Review), "The duty rise will completely overshadow any benefits of removing import tariffs, of between 6 and 9 pence a bottle, when the FTA takes effect later this year."
Beale added that the latest tax "makes a mockery of the Department of International Trade's promised big savings on Australian wine imports".
Beale continued:
It is the largest increase in wine duty since 1975. These crippling inflationary tax hikes will be lumped on top of stealth tax rises for some alcoholic products, which the government has built into the move to taxing alcohol by strength.
Commenting on the potential impact on Aussie wine exporters, and by extension, the Treasury Wine share price, Australian Grape & Wine CEO Lee McLean said it would "make things much more difficult for Australian wine exporters to the UK, just as they are trying to diversify their exports".
He said (quoted by the AFR), "the market will become less attractive" for many wine exporters, "although the UK will remain a significant market for the foreseeable future".
Treasury Wine share price snapshot
As you can see in the chart below, the Treasury Wine share price has been a strong performer over the past 12 months, up 11%.
The ASX 200 is down 6% over that same period.
