In an upbeat presentation to investors late last week, Penfolds owner Treasury Wine Estates noted that shipments to China restarted at the end of March after an absence from the market of just over three years. Demand in the country for the brand’s Australia-sourced expressions have been “strong”, the group said, boosted by “multi-city distributor roadshows” this month.
However, TWE’s strategy of making more of Penfold’s varietals available elsewhere will result in price rises worldwide from the start of next month.
“Higher prices will be implemented across a number of key [Penfolds] portfolio wines, including Bin 128, Bin 389 and Bin 407,” the company said in the presentation. “On a weighted average basis, Penfolds Bin & Icon portfolio price will increase by approximately 6%.”
CEO Tim Ford added: ““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.”
Divisional MD Tom King cited figures from Bain & Co showing that China is forecast to account for between 24% and 26% of the world’s “luxury” goods consumption by 2030, a 50% leap from last year. “There’s a lack of leading brands in the [wine] category [in China],” he said. “The top ten wine brands account for only 30% of the category versus 66% for baijiu and spirits.”
King also echoed comments he shared with Global Drinks Intel in an exclusive interview earlier this year regarding Penfolds’ diversification-of-origin strategy, which has extended to the US, France and, most recently, China. “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,” he said in last week’s presentation.
TWE will report its results from the 12 months to the end of June – the group’s fiscal 2024 – in mid-August.
