Treasury Wine Estates Withdraws 15% Growth Forecast After China Sales Slump

Treasury Wine Estates, one of the world’s largest wine companies, has revised its financial outlook for the 2025-2026 period after reporting weaker sales in China. The company made the announcement through a statement to the Australian Securities Exchange, citing a slowdown in demand for its flagship Penfolds brand in the Chinese market.

According to Treasury Wine Estates (TWE), shipments of Penfolds wines during the first quarter were consistent with expectations in most major markets. This performance was supported by the annual Penfolds Collection Release, which took place in early August. However, TWE noted that sales in China have softened, prompting the company to withdraw its previous guidance for low to mid double-digit earnings before interest and tax (EBITS) growth for fiscal year 2026 and approximately 15 percent EBITS growth for fiscal year 2027.

The company explained that it had already observed a decline in depletions—sales from distributors to retailers—in China during June and July. TWE attributed this trend to changing consumption patterns within China’s alcohol sector, particularly a reduction in large-scale banqueting events, which are traditionally important occasions for wine consumption. While there was some improvement in August, TWE said it was waiting for complete data from the Mid-Autumn Festival period, a key time for wine sales in China, before making further assessments.

Preliminary figures from September showed that while depletions increased compared to the same period last year, they remained below internal targets. If these trends continue into 2026, TWE expects that its Penfolds depletion targets for China will not be met. As a result, the company has decided it is no longer appropriate to maintain its previous growth forecasts for Penfolds in the region.

To address these challenges, TWE is implementing several measures aimed at reducing the impact of weaker Chinese sales. These include reallocating inventory to select customers in other key markets. The company emphasized that this strategy would be managed carefully to avoid creating opportunities for parallel imports—where products intended for other markets are resold back into China.

TWE stated that due to ongoing uncertainty about market conditions, it is not able to provide updated financial guidance at this time. Despite these setbacks, the company highlighted the continued strength of the Penfolds brand globally and reaffirmed its commitment to maintaining pricing discipline and brand equity across all markets.

Outside of China, TWE reported positive results from its Treasury Americas division. The company said that sales outside California grew more than five percent above the luxury wine category average, driven by brands such as DAOU, Frank Family Vineyards, and Stags’ Leap. In California itself, however, depletions were affected by a transition between distributors and related account setup activities during September.

TWE also noted that shipments in the first quarter of fiscal year 2026 were impacted by this distribution transition and efforts to balance shipments with actual sales across fiscal years 2025 and 2026. The company had previously indicated that modest EBITS growth for Treasury Americas in fiscal year 2026 would depend on mitigating reduced shipments in California through negotiations with Republic National Distribution Company (RNDC), which ceased operations in California as of September 2.

The developments come as global wine producers continue to navigate shifting consumer preferences and economic conditions in key markets. For TWE, maintaining flexibility and adapting distribution strategies remain central as it responds to evolving demand both in China and elsewhere.