Treasury Wine Estates warns of weaker performance from money-maker Penfolds

Treasury Wine Estates has warned investors to expect a weaker performance from its flagship Penfolds label as it spends up big on marketing to re-establish its presence in China while sales in the US falter.

In an investor update to the market on Tuesday, the company said it now expects earnings for Penfolds in 2025-26 to record low to mid double-digit growth — down from a previous forecast of about 15 per cent.

It is still expected to make up the lion’s share of earnings.

“Following the focus on re-building distribution in China through F25, customer inventory holdings across several of Penfolds’ other key markets are below historic levels while depletions remain strong, most notably throughout the rest of Asia,” the update said.

“This is expected to support the delivery of Penfolds’ global growth expectations in F26.”

For its Treasury Americas division, TWE said economic uncertainty and weaker consumer demand had been reflected in declining wine consumption trends across key sales channels throughout the second half of the current financial year, a softer market more pronounced at the below $US15 ($23) price points.

The company also revealed a new operating structure to take effect from July 1 that will pour its budget-friendly offerings — including Speaking Pig, 19 Crimes, Wynns, Lindmans, Blossom Hill and Wolf Blass — into a new division called Treasury Collective.

TWE also announced plans to launch an on-market share buyback for up to 5 per cent of its issued capital as part of its full-year results update in August.

The update comes just weeks after the company announced it would need to find a new path into the Californian market after its local distributor said it would cease operations later this year.

The shock decision by Republic National Distributing Company is a serious blow for the winemaker, with the shuttered distributor responsible for about 25 per cent of TWE’s sales for its Americas division and 10 per cent of total group sales.