The removal of Chinese tariffs on Australian wine exports is positive for Treasury Wines. However, the company’s emphasis of a “modest” impact initially reinforces to us that the tariffs were a catalyst to diversify Treasury’s market exposure. As a result, China will be an incremental market, which means incremental costs (we estimate $30 million in next 12 months) as well as a three-year wait for meaningful incremental China earnings. Sales into China will be smaller in quantity, but higher priced than historically.