Treasury Wines: China re-entry, record vintage

Almost three months since the removal of tariffs on Australian wine imports into China, Treasury Wine Estates (TWE) provided a market update on its Penfolds business and China strategy.

TWE CEO, Tim Ford said it was fantastic to see local Chinese consumers reignite their passion for Penfolds great Australian luxury wines, and a sense of renewed market momentum now that the China market has reopened.

“We are delighted to be bringing more of our Australian luxury wines back to China, at a time when the luxury wine market presents significant long-term growth opportunities for Penfolds and the wine category overall.

“By leveraging our unique Penfolds brand status to drive ongoing demand, we remain steadfast on our clear ambition to be the number one luxury wine brand in the market.”

Fuelling TWE’s enthusiasm for long-term growth opportunities in China, the company announced the delivery of a record 2024 Australian vintage, which will support a significant step-up in the availability of Penfolds Bin and Icon wines from 2H26.

“The 2024 Australian vintage has delivered record intakes for key Bin and Icon portfolio wines as a result of a combination of factors, including our extensive grower network and TWE’s decisive measures taken to create the best opportunities to provide luxury grade fruit, which are clearly paying off,” Ford said.

The Penfolds business is expected to grow about 15 per cent in FY24 in the range of earnings before interest, taxes, and special items (EBITS) $418-421 million but restarting trade into China would cut into margins, Ford said.

And while the profit levels from before the tariffs would not return, TWE’s focus on premium and luxury categories had more than made up the slack.

“By leveraging our unique Penfolds brand status to drive ongoing demand, we remain steadfast on our clear ambition to be the number one luxury wine brand in the market,” Ford said.

For Penfolds in FY26 and FY27, the company aims to achieve annual EBITS growth of approximately 15 per cent across both years, driven by the significant increase in availability of the Bin & Icon portfolio from the record 2024 Australian vintage intake. The company targets an EBITS margin in line with its long-term goal of 45 per cent.

Ford also said that due to ongoing strong demand for Penfolds Bin and Icon portfolio, a six per cent price increase would be introduced across Penfolds’ global customer base from 1 July.

Ford said TWE was restarting its China business with brand metrics that had remained strong. Penfolds is number two for awareness of the top 10 imported wine brands.

And demand power has also remained high – only just below Penfolds’s home market. In Australia it is 12.2 per cent, China is 10.3 per cent.

Ford said brand investment in F25 is planned to elevate the re-establishment of the Australian country of origin (COO) portfolio in China.

Penfolds MD, Tom King said Penfolds offered Chinese consumers an unrivalled portfolio of globally sourced luxury wines, from the world’s most revered wine regions including Australia, America, France, and more recently China.

“The power of Penfolds to engage with consumers across four countries of origin is truly unique. Our most recent Penfolds China wine releases have provided excellent praise from wine critics and present an incredible opportunity to drive further connection and engagement with our consumers in China, and to become a global ambassador for Chinese luxury wine.

“Similar to the roadmap we have followed in France, we continue to explore further winemaking opportunities in China, including investing in local sourcing and production opportunities to support future portfolio growth opportunities,” said Mr King.

Ford said, “This is an exciting time for TWE and the Penfolds business as we enter a post tariff era as a stronger and more diversified global business, with all the necessary elements at our disposal to maximise the incredible long-term growth opportunities in China.”