Treasury Wine Estates, the owner of the Penfolds wine brand, is anticipating a significant downturn in sales in China for the 2025-26 period. Chairman John Mullen announced that preliminary data indicates sales will fall “well below” previous expectations. In response, the company plans to re-allocate some of its high-end wine products to alternative international markets. Treasury Wine Estates is a global wine company that cultivates vineyards, produces wine, and distributes brands like Penfolds. The company operates in various regions, focusing on premium wine segments.
Mullen addressed concerns at the annual meeting regarding his extensive workload as chairman of Qantas, Brambles, and Treasury Wines. He acknowledged the inherent risks in re-allocating products, particularly the potential for wine to re-enter the Chinese market through unofficial channels. To mitigate this risk, Treasury Wine Estates will proceed cautiously to avoid stimulating parallel imports back into China.
The company had previously withdrawn its profit guidance on October 13, citing weaker-than-expected sales of Penfolds in China and ongoing challenges within its US operations. This announcement precipitated a sharp decline in Treasury Wine Estates’ share price, reaching a decade low. The strategic shift to re-allocate wine to other markets aims to offset the anticipated losses in the Chinese market and stabilize the company’s financial performance.
The re-allocation strategy is seen as crucial for Treasury Wine Estates to maintain its market position and manage inventory effectively amid fluctuating international trade dynamics. The company will need to carefully navigate potential risks associated with parallel imports to ensure the success of its new market strategy.
