China's EU wine probe boosts stocks

China's anti-dumping investigation has drawn wide attention from industry players at home and abroad. But, it appears there's plenty of upside for China's wine industry.

Wine stocks in China soared for the past few days. After the Chinese Ministry of Commerce launched an anti-dumping and anti-subsidy investigation into EU wine imports, wine stocks in the A-share market like Changyu Wine led the rise in the alcohol sector with average gains of more than 4%. However, if the investigation do lead to a tariff at the end, just how will it influence the industry in the real economy?

Yan Han, wine dealer, said, "The current tariff level is 30 to 40 percent. In that case a 1000 RMB bottle of wine would cost more than 1300. If the anti-dumping case stands the tariff might double or even triple. The cost of wine will rise substantially."

Wine dealers across China are rushing to hoard more wine before the price rises. Some are looking at other countries for import, like Chile and Australia. However, according to them, there are also a positive side of this situation.

"This round of sanction will kick out some of the less competitive players in the industry. In the long term, the industry will grow stronger as a whole," Yan said.

According to industry analysts, the competition between EU and Chinese wine companies mainly focuses on the low end market. If the tariff takes effect, it will give more market space for Chinese companies in this area.