Yesterday in an update to investors, Penfolds provided a roadmap for its re-entry into the Chinese market. The plan will see Treasury Wine Estates remain focused on driving Penfolds’ status as a luxury brand and includes a global increase to prices starting from 1 July.
Penfolds’ CEO Tim Ford explained that, “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.”
At the meeting, Penfolds’ provided investors with its expected three year roadmap for the brand. This includes expected F24 EBITS of between $418 and $421 million, driven by top-line growth across the portfolio. The EBITS margin is expected to fall around 42%, reflective of the higher onshore overhead costs in China following the lifting of tariffs.
Throughout the following financial year, Penfolds anticipates low double-digit EBITS growth driven by the price increases and by slight shipment increases. By F26 and F27, Penfolds is hoping to achieve annual EBITS growth of 15%, driven by the increased availability of the record 2024 vintage intake.
According to Tim Ford, “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 global price hike, scheduled to come into effect in July, has been pitched as a method to moderate demand outstripping production. These supply pressures are expected to be mediated from the second half of 2026.
“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,” said Ford.
“Since 2018, TWE has invested $100m in vineyard replanting and acquisitions to enhance long term production capacity, focusing on soil revitalization and vine redevelopment. Additionally, from 2018-2022 we invested $180m in TWE’s Barossa winemaking and packaging facilities to ensure world-class supply chain capabilities to cater for increased luxury wine production and availability.”
In the meantime, Penfolds is also satiating this demand via its globally sourced luxury wines portfolio, which now includes wines from Australia, America, France and China.
“The power of Penfolds to engage with consumers across four countries of origin is truly unique,” said Penfolds’ Managing Director Tom King.
“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.’
In a recent interview with Drinks Trade, Penfolds’ Group Winemaker Stephanie Dutton said that, “whilst Australia is where our home is anchored, we now realise that our footprint is very global, not just from a sales point of view and a marketing point of view anymore, but from a winemaking point of view, and so being able to spend time in other markets, see the support and the faith behind Penfolds, but also learn from these markets is incredibly exciting.”
Tom King added that the “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.”
Penfolds continues to perform strongly despite the current pressures being faced by the industry. To learn more about TWE’s most recent results, read this Drinks Trade article.
