TWE Flags Slowdown in China Sales After June as Alcohol Curbs Bite

Treasury Wine Estates has warned of a slowdown in stock depletion in China since June, as tighter alcohol restrictions and changing drinking habits dent sales momentum in its biggest Asian market.

CEO Tim Ford said the company had observed a shift away from large banquets toward smaller business and lifestyle occasions, prompting softer depletions during June and July — typically already low months for sell-through. The company is monitoring the trend closely ahead of the key Mid-Autumn Festival period and may adjust marketing and allocation plans if the softness persists.

The slowdown was noted today in TWE’s FY 2025 result and media call. However, the group delivered stellar results. For the year ended June 2025, TWE reported net sales revenue up 7.2% to AUD 2.9 billion and EBITS rising 17% to AUD 770.3 million. Organic sales slipped 1.1% as commercial and lower-priced wines underperformed.

Penfolds Leads Luxury Wine Category in China

Penfolds, the company’s flagship brand, led the gains. Net sales revenue rose 7.3% to AUD 1.073 billion, accounting for 37% of the group’s total. Earnings jumped 13.2% to AUD 477 million. Asia was Penfolds’ largest regional market, with sales surging 19.1% to AUD 749.6 million, driven largely by a strong rebound in China after Beijing lifted its tariffs on Australian wine in March 2024. This means Aisa led by China alone now contributes about 70% of Penfolds’ total sales.

Treasury diverted resources from other markets to prioritise China’s relaunch, with shipments of Penfolds’ Bin and Icon ranges rising sharply. The push helped Penfolds reclaim a leadership position in China’s wine market, with 7.3% share in offline retail and 13.3% in e-commerce.

Its luxury wine (RMB 150+) is driving category growth, with offline retail and e-commerce up by 5.4% and 47.5%, respectively year on year. According to the group, it now ranks first among Australian and U.S. origin wines in the luxury wine category, and second among French origin wines in China’s premium segment.

In the second half of the year, the brand’s core range reached about 12,000 outlets in China, spanning specialty stores, retail chains and on-trade channels. In the conference call with media, outgoing CEO said business costs rose 22% year-on-year, reflecting higher brand and management spending to support China’s long-term growth.

Price Inversion Worries

During the call, Ford also cautioned that price inversion — when online prices fall below market levels — remains a problem, fuelled by parallel imports. “We are disappointed to see below-market pricing still visible in e-commerce channels due to parallel source products,” he told analysts. “We are taking more active measures to mitigate this, including allocation and revenue management initiatives.”

Changing Drinking Patterns

He also flagged a shift in Chinese alcohol consumption since June, away from large banquets toward smaller business gatherings and lifestyle occasions. This was likely due to the sweeping government alcohol ban, which has played out to have disproportionate impacts on the wine and drinks industry.

That change slowed stock depletion in June and July, typically low-demand months, and could shape sales into the Mid-Autumn Festival, a key wine-buying season.

“We will monitor these trends closely and adjust market activation and allocation plans if required,” Ford said, adding that Penfolds’ global sales model allows flexibility to redirect inventory if needed.

Mixed Performance Elsewhere

Outside Penfolds, the Americas business — led by DAOU — saw sales jump 16.8% to AUD 1.1707 billion, with earnings up 33.9% to AUD 308.6 million. The smaller Luxury portfolio fell 5.9% in sales to AUD 693.5 million, while earnings plunged 27.6% to AUD 55.1 million.

Ford remained upbeat on China despite “noise” and varied market trends. “We remain confident in our ability to navigate the dynamic Chinese market landscape,” he said. “Penfolds has a proven track record of consistent growth through periods of significant change.”