Penfolds could be headed for China after March – Treasury Wine Estates

Treasury Wine Estates, the maker of Penfolds wine, is preparing to re-enter the Chinese market as soon as the market reopens as expected to Australian exports.

The company, which reoriented itself towards luxury and premium wine brands to make up for the loss of profits from China, told investors that it expected China to release the results of its expedited review of tariffs on Australian wine as early as March, 2024.

Australia’s China wine exports tanked with the imposition of tariffs.

TWE said: “TWE is prepared and well placed to commence re-establishing its Australian country of origin portfolio in China, should there be a positive outcome from the review, and would pursue several initiatives.”

Planned initiatives include:

• Continuing the company’s multi-country origin strategy led by Penfolds French, US and Chinese portfolios
• Re-establishing distribution of entry level wines including Penfolds Max, Koonunga Hill and One by Penfolds
• Reallocating some Penfolds Bin and icon wines to progressively rebuild Chinese distribution
• And re-establishing China distribution for Australian sourced premium brands including Rawson’s Retreat.

Meanwhile TWE reported EBITS profit for 1H24 down 9.8 percent to $289.8 million on net sales revenue down 2.3 percent to $1.28 billion.

Growth in luxury wine sales was offset by reduced premium wine shipments in Treasury ASmericas and reduced premium and commercial shipments in Treasury Premium Brands.

Net sales revenue per case of wine sold was up 9.8 percent driven by the ongoing premiumisation of sales towards luxury wines such as Penfolds Grange.

Sales of Penfolds brand wines were up 2.9 percent in the year.

Further reading:
Treasury Wine reaps benefits of premiumisation
Wine sales slump as China tariffs take their toll

Picture: Penfolds