Treasury Wine Estates has updated its performance expectations for the 2025-2026 financial year following a softening of sales in China as well as other factors.
TWE said in an ASX announcement that first-quarter shipments of Penfolds were in line with expectations across key markets globally, supported by the successful annual Penfolds Collection Release in early August.
However, sales in China are softening and the company no longer believes it is appropriate to retain the Penfolds guidance for low to mid double-digit EBITS growth in F26 and approximately 15 percent EBITS growth in F27.
“As part of its F25 results announcement on 13 August, TWE noted that in China there had been softness in depletions throughout June and July as a result of evolving consumption dynamics within the alcohol sector, with large-scale banqueting occasions particularly impacted,” the statement says.
“While August depletions showed some improvement, TWE noted that the Mid-Autumn Festival period would provide a clearer outlook of the likely performance trends through the remainder of the year.
“Complete data for Penfolds performance through the key Mid-Autumn Festival period remains pending.
“However, whilst depletions grew in September compared with the pcp, preliminary data indicates that depletions remain weak relative to plan.
“If the performance trends indicated by the preliminary data continue through F26, Penfolds depletions targets for F26 in China are unlikely to be achieved.
“As a result, TWE no longer believes it is appropriate to retain the Penfolds guidance for low to mid double-digit EBITS growth in F26 and approximately 15 percent EBITS growth in F27.
TWE says several initiatives are now being implemented to mitigate the expected impacts in China in F26, including pursuing opportunities to re-allocate product to select customers in other key markets in a manner that is sustainable and minimises the risk of parallel imports back into the China market.
“Given the uncertainty that remains as to the outlook, TWE is not in a position to provide revised guidance at this point in time,” the company says.
“Penfolds strong fundamentals, a flexible and diversified, global sales model and continued investment in building distribution, availability and consumer demand continues to drive depletion growth in key markets. Importantly, TWE remains committed to maintaining the long-term strength and equity of the Penfolds brand through pricing discipline across all markets.”
Meanwhile TWE says Treasury Americas’ portfolio is performing well outside of California, with depletions growing ahead of the Luxury category, up more than five percent ex-California, led by DAOU, Frank Family Vineyards and Stags’ Leap.
“In California, depletions were impacted by the distributor transition, including key account set-up activities in September,” the statement says.
“With respect to shipments in 1Q26, as expected, Treasury Americas’ performance has been impacted by the distribution transition in California in addition to the focus on rebalancing shipments to depletions across F25 and F26, with some rebalancing having been completed in the quarter.
“As part of its F25 results announcement on 13 August, TWE stated that its expectation for modest EBITS growth in F26 for Treasury Americas was contingent on mitigating the impact of reduced shipments in California through negotiations with Republic National Distribution Company (RNDC), who was Treasury Americas’ incumbent distributor in California at the time and who had announced the closure of their operations in the state effective 2 September.”