INTERNATIONAL

RISK ASSESSMENT
Treasury Wines Estates
Exporting to Latin America
Latin America Market Size

■ Value: US$ 10.6 billions

■ Volume: 206 millions of 9 litre cases
■ Second largest market among the Americas
■ Fourth largest market worldwide
Latin America Market Size

Commercial Value (US$ billions)

Netherlands 4.1
Nordics 10.4
UK 24
New Zeland 1.4
Australia 8
South East Asia 2.8
North Asia 9.2
China 12.9
Latin America 10.6
Canada 5.6
US 37.9
0 5 10 15 20 25 30 35 40
Latin America Grow Trends

■ Total Wine: 12.1% CAGR

■ Premium Wine: 12.0% CAGR
■ Highest compound annual growth rate (CAGR) in the world
Latin America Grow Trends

Total Wine Compound Annual Growth Rate (%)

12.1
11.4

4.7
3.8
3.1 3.2
2.6 2.5
1.9 1.8 1.7

US Canada Latin America China North Asia SE Asia Australia New Zeland UK Nordics Netherlands
Determining Risks
■ It is important to analyse conjunctural factors to determine risks
– Countries that generally have a volatile economy
– Economic crisis due to pandemic
– Efficiency in fighting the pandemic
– Inflation rates
– Market growth in recent years
– Household consumption capacity
Risk Matrix
Risk Matrix

Risk Likelihood Impact Priority

High Inflation Possible Moderate Medium
Exchange Controls Possible Moderate Medium
Late payment Likely Significant Med Hi
Damage of the goods Unlikely Significant Medium
Change in legislation Unlikely Moderate Low Med
High Inflation Risk

■ Likelihood: Possible
■ Impact: Moderate
■ Priority: Medium
■ Customers may be unable to pay invoices on time as a result of high inflation, while
new customers may be interested in longer credit terms. High inflation, in the worst-
case scenario, can lead to hyperinflation and, as a result, economic collapse. To avoid
defaults, only sell on secure conditions.
■ Mitigation: Pay attention to the inflationary trends of the verified countries. If the
trends are bad, avoid riskier trades.
Exchange Controls Risk

■ Likelihood: Possible
■ Impact: Moderate
■ Priority: Medium
■ A government can impose exchange restrictions on the buying and sale of local currency.
The majority of nations that use foreign exchange restrictions today are developing markets.
■ Mitigation: There should be a difference established between a country's central bank
causing a delay and a region where there is an endemic problem leading in export under-
invoicing and rampant smuggling. The firm should not participate in any acts that violate the
legislation in that market or violate the bribery act, since the consequences can be severe.
Late Payment Risk

■ Likelihood: Likely
■ Impact: Significant
■ Priority: Med Hi
■ Due to internal crises, some customers may be inclined to pay for the products after the
previously agreed upon. This risk becomes common in countries with more fragile
economies that are going through crises, as is the case in several Latin American
countries.
■ Mitigation: Making the dates and payment methods for products more flexible in order
to allow customers in more fragile situations to be able to pay for their products is a
great way to react to this situation.
Damage of the Goods Risk

■ Likelihood: Unlikely
■ Impact: Significant
■ Priority: Medium
■ If we are exporting products to another country, we must understand how your goods
will maintain their quality during transportation. We must pick the appropriate delivery
method and packaging conditions based on this. Another export risk arises as a result of
this. Special conditions are critical for our items. If we do not set up the necessary
circumstances, our items may be destroyed when they arrive at the customer.
■ Mitigation: Check that our products are being stored and transported correctly and
protect the carrier in the form of insurance.
Change in Legislation Risk

■ Likelihood: Unlikely
■ Impact: Moderate
■ Priority: Low Med
■ Changes in international trade policies may have an impact on businesses that export
and import items on a regular basis. They also have an impact on investors who make
foreign direct investments.
■ Mitigation: Keeping a consulting team on regulation of specific areas helps to mitigate
risk, enabling investments.
Conclusions

■ Essential territory for the future of the company, its market volume and propensity for
growth
■ We should not expect our sales to grow proportionally to the past few years, due to the
risks involved
■ Even with all the risks, it is very important that we maintain a good relationship with
our customers in the region
■ For this, payment policies and differentiated services may be necessary
■ It is very important that we carry out periodic risk analysis in order to detect variations
and make operations safer.
References
■ Australian Bureau Statistics 2021, One year of COVID-19: Aussie jobs, business and
the economy, viewed 06 Oct 2021,
https://www.abs.gov.au/articles/one-yearcovid-19-aussie-jobs-business-and-economy
■ Gray, D, 2020, ‘Treasury Wine plans for 'severe' China tariffs as tension escalates’,
Sydney Morning Herald, viewed on 06 Oct 2021,
https://www.smh.com.au/business/companies/treasury-wine-holds-on-tochina-strategy-d
espite-trade-tensions-20201105-p56bpe.htm
■ Gray, D, 2020, ‘Treasury Wine plans for 'severe' China tariffs as tension escalates’,
Sydney Morning Herald, 5 November, viewed on 06 Oct 2021,
https://www.smh.com.au/business/companies/treasury-wine-holds-on-tochina-strategy-d
espite-trade-tensions-20201105-p56bpe.htm
■ TWE 2020, TWE 2020 Fact book, Treasury Wine Estates, Melbourne, viewed 06 Oct
2021,
https://www.tweglobal.com/-/media/Files/Global/ASXAnnouncements/2020/TWE-2020
-Fact-Book.ash
References
■ World Bank 2020, The Global Economic Outlook During the COVID-19 Pandemic: A
Changed World, viewed 06 Oct 2021,
https://www.worldbank.org/en/news/feature/2020/06/08/the-global-economicoutlook-du
ring-the-covid-19-pandemic-a-changed-world
■ World Health Organisation 2020, Impact of COVID-19 on people's livelihoods, their
health and our food systems, viewed 06 Oct 2021,
https://www.who.int/news/item/13-10-2020-impact-of-covid-19-onpeople%27s-liveliho
ods-their-health-and-our-food-system
■ Understand business risks when exporting, viewed 06 Oct 2021,
https://www.tweglobal.com/-/media/Files/Global/ASX-Announcements/2020/TWE-202
0-Fact-Book.ashx
■ Biggest Risks in Export Business and Solutions, viewed 06 Oct 2021,
https://exportimportpractical.com/biggest-risks-export-business-solutions/
References

■ Nicola, M, Alsafi, Z, Sohrabi, C, Kerwan, A, Al-Jabir, A, Iosifidis, C, Agha, M, & Agha,

R 2020, ‘The socio-economic implications of the coronavirus pandemic (COVID-19)’,
A review. International journal of surgery (London, England), 78, 185–193.
https://doi.org/10.1016/j.ijsu.2020.04.018
■ OECD 2021, OECD Economic Outlook, Interim Report March 2021, OECD
Publishing, Paris, https://doi.org/10.1787/34bfd999-en