Treasury Wine Estates reported a statutory net loss of A$1.08 billion (US$762 million) for fiscal 2026 after heavy impairments to its US business, even as the company pointed to sharply higher Penfolds depletions and falling customer inventories in China as signs of strengthening demand.
Penfolds depletions in China — a measure of product moving from distributors into the market — jumped 34.7% from a year earlier, TWE said. Customer inventory fell by about 200,000 cases, completing half of the company’s targeted 400,000-case reduction.
The upbeat China figures contrasted with weaker group results and more cautious assessments from Chinese distributors, who said sluggish business entertainment, accumulated inventory and intense price competition continued to weigh on sales.
TWE’s net sales revenue fell 12.8% to A$2.56 billion (US$1.81 billion) in the year, primarily because of lower shipments across its divisions. Earnings before interest, tax and material items, or EBITS, dropped 36.1% to A$492.3 million (US$347 million).
The result nevertheless exceeded the company’s EBITS guidance of A$480 million to A$490 million, with Penfolds remaining its largest earnings contributor.
The result nevertheless exceeded the company’s EBITS guidance of A$480 million to A$490 million, with Penfolds remaining its largest earnings contributor.
TWE attributed the decline to moderating demand, deliberate measures to protect its brands and distribution channels, and a difficult comparison with elevated shipments in the previous year.
The statutory loss included A$1.31 billion in post-tax material-item charges, largely related to non-cash impairments of US assets. During the second half, TWE recognised an additional A$558.4 million impairment as it accelerated the restructuring of its American supply chain.
“F26 was a year of decisive action and significant change for Treasury Wine Estates,” Chief Executive Sam Fischer said. “While our financial performance reflected evolving market conditions and the proactive measures to ensure brand and channel health, we made substantial progress towards reshaping the business for long-term success.”
Those measures included reducing shipments, cutting customer inventories and restructuring production and distribution in response to weaker demand. The strategy weighed on revenue and earnings across all three of TWE’s business divisions.
Penfolds Relies on Asia
Penfolds generated A$998.3 million (US$705 million) in net sales revenue, down 7%, while EBITS fell 15.2% to A$404.3 million (US$285 million).
Asia remained the brand’s biggest market, accounting for A$747 million, or nearly 75%, of Penfolds’ net sales revenue. Revenue in the region declined just 0.4%, the smallest drop among its markets.
Asia remained the brand’s biggest market, accounting for A$747 million, or nearly 75%, of Penfolds’ net sales revenue. Revenue in the region declined just 0.4%, the smallest drop among its markets.
TWE said the decline reflected its efforts to reduce customer inventories in China and restrict shipments that could feed the parallel-import market.
Despite lower shipments, the company said underlying consumer demand remained strong. Penfolds depletions rose 34.7% in China, 18.1% across the rest of Asia and 5.7% in Australia.
TWE said China’s performance improved during the fourth quarter, particularly in May and June. Stronger-than-expected depletions allowed the company to reduce customer inventories by 200,000 cases, exceeding the 150,000-case reduction forecast at its investor day.
The company expects to remove the remaining 200,000 cases of excess customer inventory during fiscal 2027.
Penfolds also increased its share of China’s online wine market by 2.4 percentage points to 15.7%, while its offline share rose 1.9 percentage points to 8.1%, according to figures cited by TWE.
TWE said initiatives to address parallel imports contributed about 200,000 cases, or roughly half of the increase in China depletions. The company did not provide a detailed breakdown of how those initiatives contributed to the reported growth.
TWE said global depletions of Penfolds Bin 389 and Bin 407 remained strong. In July, however, it suspended new orders for Bin 407 in China for three months, a move widely seen as an attempt to limit supply and reduce pressure on channel inventories and prices.
“The growth in depletions globally, led by China, was particularly pleasing, reflecting the continued excellence of our execution and strengthening demand power,” Fischer said.
Distributors Remain Cautious
Chinese distributors interviewed by Vino Joy News described a more difficult market than TWE’s figures appeared to suggest.
An authorised Penfolds distributor in northeastern China said its fiscal 2026 sales fell markedly from the previous year as weak business entertainment and subdued consumer spending hurt demand.
The distributor said prices for authorised Penfolds wines had moved close to those of parallel imports, prompting it to stop selling parallel-imported products and focus entirely on wines from official channels.
It attributed that shift, however, more to intense market-driven price competition than to TWE’s distribution strategy.
The head of a Penfolds distributor in eastern China said its sales finished 10% to 15% below the target set by the company and were weaker than in fiscal 2025.
“In fiscal 2025, Australian wine had only just returned to China, so the market was rebuilding from virtually nothing and shipments moved relatively smoothly,” he said. “In fiscal 2026, we had to sell through the inventory accumulated in fiscal 2025, and then the alcohol ban hit. Several negative factors arrived at once, so problems were inevitable.”
China removed punitive tariffs on Australian bottled wine in March 2024, triggering a rapid return of Australian shipments. But the initial surge also contributed to higher inventories as consumer demand remained weak.
The distributor said TWE and its wholesalers may be seeing different parts of the market. Traditional wholesale channels continued to struggle, he said, while on-demand retail platforms and major supermarket chains performed comparatively well.
US Business Remains the Biggest Drag
Treasury Americas recorded the steepest decline among TWE’s divisions.
Net sales revenue fell 21.2% to A$575 million (US$406 million), while EBITS plunged 61.4% to A$90.2 million (US$63.7 million).
TWE blamed weak US wine demand, disruption from changes to its California distribution system and the reversal of a 400,000-case gap in the previous year, when shipments exceeded depletions.
The company also repurchased California inventory from distributor Republic National Distributing Co. About 40% of that stock was sold during the reporting period at a gross margin close to zero.
Treasury Collective, which houses brands including 19 Crimes, reported a 12.9% decline in net sales revenue to A$987.7 million (US$698 million). EBITS dropped 47.8% to A$68 million (US$48 million).
Weak premium-wine demand and a further decline in 19 Crimes weighed on the Americas business, while commercial brands dragged on results in Australia and Europe.
Investors Await a Turnaround
TWE shares rose as much as 6.4% in early trading after the results were released before reversing course and falling as much as 2.4%, Reuters reported, reflecting uncertainty over whether the company’s restructuring has gone far enough.
Investors have largely treated the US business as TWE’s most serious problem. The latest impairments, inventory reductions and supply-chain changes could help clear longstanding excess capacity, but they will continue to weigh on near-term performance.
The company’s next test will be whether it can turn restructuring into renewed earnings growth.
If losses in the US ease and Penfolds’ higher depletions in China begin translating into stronger revenue and profit, fiscal 2026 may prove to be the low point of TWE’s reset.
But if channel inventories remain elevated and reported depletion growth fails to produce better financial results, the gap between TWE’s positive assessment of China and the experience of its distributors will become increasingly difficult to overlook.
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