Treasury Wine Estates has issued a warning that softening wine demand in the United States and China, two of its key markets, will negatively impact earnings. The company plans to implement inventory reductions while confirming the cancellation of its previously announced $200 million share buyback program. Treasury Wine Estates is a global wine company that owns a portfolio of brands, including Penfolds. It is involved in viticulture, winemaking, and distribution.
The Penfolds owner anticipates earnings before interest and tax (EBIT) for the first half of 2026 to fall within the range of $225 million to $235 million. In response to the challenging market conditions, Treasury Wine Estates intends to take “deliberate strategic action” to safeguard brand equity. This includes decreasing shipments into both China and the US to reduce distributor inventories by approximately 700,000 cases over the next two years.
Specifically in China, distributor inventories are projected to be reduced by around 400,000 cases, representing roughly $215 million in net sales revenue, with the goal of stabilising Penfolds pricing in the region. These actions are designed to mitigate the impact of slowing demand and maintain the brand’s positioning in these important markets.
New chief executive Sam Fischer announced that the business is embarking on a transformation phase, including a company-wide cost and operational overhaul, that targets $100 million in annual savings. However, the majority of these benefits are not expected to materialise until fiscal year 2027 and beyond, suggesting a longer-term strategy to improve efficiency and profitability.
