Penfolds Makes Another Big China Distribution Bet with Wajiu

The Australian wine giant Treasury Wine Estates has handed Chinese wine distributor Wajiu exclusive rights to three Penfolds wines, as it seeks new avenues for growth in a market still struggling to regain momentum. 

TWE signed a strategic cooperation agreement with Wajiu in Hangzhou on Aug. 13, giving the distributor exclusive rights in China to Penfolds FWT 585 and FWT 543, both produced in France, and Australian-made Bin 128.

The deal adds Wajiu to a select group of major Chinese distributors that hold exclusive rights to individual Penfolds labels, a model TWE has increasingly used alongside its broader distribution network for flagship wines such as Bin 389, Bin 407 and Bin 707.

“FWT 585, FWT 543 and Bin 128 will all be exclusively distributed by Wajiu in China,” Wajiu Group Partner Yao Zhenhai explained to Vino Joy News. “We have detailed purchasing plans and brand strategies in place and will operate all three as branded products.”

TWE declined to provide further details on the agreement when contacted by Vino Joy News. 

Penfolds expands its exclusive distribution network

Penfolds has an extensive distributor network in China. Most distributors sell core labels such as Bin 389, Bin 407 and Bin 707 on a non-exclusive basis. A smaller group of major distributors, however, have secured exclusive rights to specific labels, taking responsibility for building those products in the market alongside sales of Penfolds’ broader portfolio.

COFCO Wine & Wine, VATS Liquor, C&D Wines and SC Global Wine Corporation Ltd, an alcohol trading company under Luzhou Laojiao, have all previously established various forms of exclusive distribution partnerships with TWE.

COFCO Wine & Wine previously held exclusive distribution rights for the Penfolds Max’s range, while VATS Liquor exclusively distributes products including Bin 704, Bin 600 and Koonunga Hill. C&D Wines became the general distributor for Penfolds Bin 8 and St Henri in China in 2024. SC Global Wine Corporation Ltd, meanwhile, has long held exclusive rights to Bin 138 and has also secured exclusive China distribution rights for Penfolds Grange La Chapelle.

One Penfolds distributor in eastern China said TWE’s decision to add another exclusive distributor reflects a common strategy among major drinks brands looking to increase sales through their distribution networks.

“When regional channels can’t generate enough additional volume, one option is to hand a particular product to a major distributor on an exclusive basis and build it into a high-volume hero SKU,” said the distributor, who requested anonymity. “At the very least, that immediately increases the overall sales target assigned to the distributor.”

Regional distributors could still purchase Bin 128 from the exclusive distributor, he noted. But if they are reluctant to effectively help another distributor build its business, the exclusive distributor would still be responsible for meeting its own sales targets. TWE, meanwhile, could offer regional distributors other products, including white wines.

“Either way, the move creates more room to expand overall sales volume,” he said.

Although Wajiu may also be able to secure allocations of established Penfolds bestsellers such as Bin 389 and Bin 407, the company is expected to focus more heavily on the three wines for which it holds exclusive rights.

Yao said Wajiu could theoretically seek allocations of other Bin-series wines through its regular cooperation with Penfolds. However, Wajiu has no sales targets for those labels, nor are they a core focus for the company.

“Whether we can purchase them also depends on product availability from the brand owner,” he said.

Wajiu: From Supply Chain Platform to Brand Operator

Founded in 2014, Wajiu was among China’s early B2B platforms to bring an internet-based model to the imported drinks trade. Its business spans global alcohol sourcing, import supply chains, warehousing and distribution, and digital transactions.

Through its website and app, the company connects overseas wineries with domestic distributors, using its supply-chain infrastructure and digital capabilities to reduce transaction costs across the alcohol trade.

In recent years, however, Wajiu has been moving beyond its traditional role as an imported wine supply-chain platform, expanding into higher-value businesses including fine wine distribution and premium brand management.

In April 2023, Summergate Fine Wines & Spirits joined Wajiu China. Founded in 1999, Summergate has long specialized in fine wines and spirits, with offices across mainland China, Hong Kong and Macau. Its customers span hotels, restaurants, bars, major supermarkets, convenience stores and e-commerce platforms.

Three months later, Summergate and Spain’s Familia Torres reached an agreement to combine their China businesses, with Summergate acquiring Torres China.

The two deals gave Wajiu greater access to fine wines and premium brands while strengthening its presence in traditional high-end channels such as hotels and restaurants. Securing exclusive distribution rights for the three Penfolds wines marks a further step in Wajiu’s evolution from a supply-chain specialist into a brand operator.

“We stopped being just a supply-chain company a long time ago. Supply chain was only one stage of our development,” Yao said. “We have now completed the acquisition of Summergate and integrated the relevant resources of Torres China. We have a portfolio that includes top estates, mainstream commercial brands and fine wines, many of which we operate through a brand-management model.”

Yao said Wajiu has been pushing for growth across all of its distribution channels since the second half of last year.

“Good products are the foundation,” he said. “But you need strong brands combined with omnichannel operational capabilities and the ability to serve different consumption occasions. Only then can those strengths reinforce one another.”

Wajiu’s network spans major retailers such as Sam’s Club and Metro, as well as restaurants, hotels and traditional wine distributors, Yao said.

“Most of China’s high-end restaurants and five-star hotels are our partners, and we also work with tens of thousands of distributors nationwide,” he said. “Every channel has its own characteristics. With unified management at the national level, these channels can reinforce one another.”

“Penfolds chose Wajiu precisely because we have built substantial hands-on experience in omnichannel distribution and operating across different consumption occasions,” Yao added. “That kind of comprehensive capability remains relatively scarce in the industry.”

“French Wine Still Has the Broadest Recognition in China”

Of the three wines Wajiu will distribute exclusively, FWT 585 and FWT 543 are produced in France, while Bin 128 comes from Australia. The agreement therefore represents more than another bet on Penfolds’ traditional Australian portfolio: it also puts the brand’s less conventional French wines at the center of Wajiu’s strategy.

French wine has faced mounting challenges in China in recent years, including fragmented branding, greater price transparency and cases in which market prices for some prestigious château wines have fallen below distributors’ acquisition costs.

Yao, however, does not believe those pressures have fundamentally weakened French wine’s position among Chinese consumers.

“Although French wine has experienced price declines in recent years, that is part of the market’s transformation,” he said. “In reality, France still has the broadest recognition among consumers.”

“Australian wine imports are indeed showing an upward trend, but for Chinese consumers, when you mention wine, France is still what instinctively comes to mind,” he added.

In Yao’s view, Penfolds’ French wines benefit from two powerful sources of recognition: their French provenance and the Penfolds brand. Combined with Wajiu’s distribution and service capabilities, he believes the wines have significant room for growth.