Penfolds ‘reignites’ China luxury market

Chinese consumers are “reigniting their passion for Penfolds Australian luxury wines” and there is a sense of renewed market momentum, says Tim Ford, CEO of Treasury Wine Estates.

“It is fantastic to see,” Ford says in a market update on its Penfolds business and China strategy almost three months since the removal of tariffs on Australian wine imports into China.

“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.”

The buoyant market update comes a week after the Federal Government announced Australia has exported $86 million of wine to China in recent months.

TWE says the early read on consumer depletions has been “very positive” through Penfolds e-commerce flagship stores.

“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.”

TWE 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 the second half of the 2026 financial year.

“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.

“Since 2018, TWE has invested $100 million in vineyard replanting and acquisitions to enhance long term production capacity, focusing on soil revitalisation and vine redevelopment.

“Additionally, from 2018-2022 we invested $180 million in TWE’s Barossa winemaking and packaging facilities to ensure world-class supply chain capabilities to cater for increased luxury wine production and availability.”

Penfolds MD Tom King said Penfolds’ unrivalled portfolio of globally sourced luxury wines continued to provide consumers from across China with access to 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,” he said.

“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.”

TWE provided an update on Penfolds’ outlook which includes:

F24
• Penfolds EBITS are expected to be delivered in the range of $418-421 million, driven by strong top-line growth across all portfolio tiers and price points, with the weighting of Bin and Icon portfolio shipments to the second half of the 2024 financial year completed as planned.
• Penfolds EBITS margin is expected to be approximately 42 percent, reflecting the reestablishment of entry-level Australian COO Luxury tiers and higher onshore overhead costs in China through the fourth quarter of the 2024 financial year following the removal of tariffs.
• TWE continues to expect mid-high single digit Group EBITS growth in the 2024 financial year, excluding the EBITS contribution from DAOU.