Australian wine producer Treasury Wine Estates reported its largest half-year net loss since listing, citing weaker conditions in the United States and China and the impact of measures to curb parallel imports.
The company said it posted a net loss of A$649.4 million for the six months ended Dec. 31, compared with a profit of A$220.6 million a year earlier. The result marks the group’s biggest half-year loss since it went public in 2011.
Net sales revenue fell 16% year-on-year to A$1.3 billion, while earnings before interest and tax declined 39.6% to A$236.4 million.
Treasury Wine attributed the downturn to slower global wine sector growth, deliberate shipment constraints aimed at limiting parallel trade and a high comparison base from unusually strong shipments in the prior-year period.
In the first half of fiscal 2025, shipments to China surged after Beijing lifted punitive tariffs on Australian wine at the end of March 2024. Penfolds, one of the most recognised imported wine brands in China, was among the main beneficiaries. But against subdued overall demand and limited channel capacity, sustaining further growth has proved challenging.
Parallel imports also weighed on performance. During fiscal 2025, significant volumes of lower-priced Penfolds wines entered China through unofficial channels, pressuring brand positioning and distributor margins. In response, the company restricted shipments of certain Penfolds products in the current fiscal year to stabilise channel health, a move that dampened short-term results.
Starting in the second quarter of fiscal 2026, Treasury Wine said reducing customer inventory in China by about 0.4 million cases, equivalent to A$215 million in net sales revenue, will remain a focus over the next two years.
At the same time, the company said it plans to increase investment in white wines and fresher, lighter styles — categories where it has historically been less dominant but which are currently benefiting from stronger consumer momentum.
Penfolds outperforms other divisions
Penfolds generated earnings before interest and tax of A$201.0 million in the first half of fiscal 2026, compared with A$44.0 million at Treasury Americas and A$28.1 million at Treasury Collective.
Although Penfolds’ earnings fell 19.6% year-on-year, the decline was less severe than at the other divisions. Earnings dropped 63.6% at Treasury Americas and 51.1% at Treasury Collective.
The company again cited the high prior-year comparison and shipment restrictions aimed at limiting parallel trade as key factors behind the decline, but said underlying demand in core markets remains solid.
Penfolds depletions in China rose 17.2% in the first half. Core labels Bin 389 and Bin 407 recorded 11.3% growth in depletions, with stronger momentum ahead of the Lunar New Year.
Chief Executive Officer Sam Fischer said key brands continued to resonate with consumers, reinforcing confidence in the company’s portfolio and its transformation plans.
Treasury Wine expects Penfolds’ full-year fiscal 2026 earnings before interest and tax to reach about A$400 million.
Price adjustments support sales
A Chinese distributor, speaking on condition of anonymity, told Vino Joy News Penfolds saw sales growth from late last year through the Lunar New Year peak, but attributed much of the increase to stronger rebate support and price adjustments.
“Flagship products like Bin 407 have come down in price and are now close to parallel-import levels. That’s largely due to higher rebates from the brand owner,” the distributor said.
When Penfolds’ Australian range returned to China in 2024, Bin 407 carried an official retail price of around 1,000 yuan, creating opportunities for arbitrage through parallel imports. Authorised pricing has since fallen to about 700 yuan, narrowing the gap and reducing incentives for grey-market trading, the distributor said.
“In my regional market, both sales volume and turnover have increased. Matching last year’s Lunar New Year performance was largely the result of price reductions,” he said. “But pricing is now very transparent, and everyone is discounting. That may not be positive for distributor margins, and it’s unclear what impact this will have longer term.”
In its report, Treasury Wine attributed depletion growth to strengthening brand health metrics.
Despite the weaker first-half results, the company said underlying operating trends for its core brands remain constructive. It expects second-half earnings to exceed first-half results, supported by improved momentum following distribution adjustments in California.
Treasury Wine said cost discipline will be central to its strategy. It will strengthen cost controls, suspend its fiscal 2026 interim dividend, defer non-essential capital expenditure, accelerate divestment of non-core assets and carefully manage the release of the 2026 vintage.
Reducing customer inventory in both China and the United States has been identified as a priority over the next two years.
The Chinese distributor said many local distributors continue to carry relatively high inventory levels, adding that improvement will depend on whether Treasury Wine lowers sales targets to maintain willingness to restock.
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