The trade dispute with China is forcing Australia's largest wine company Treasury Wine Estates (TWE) to change course. Original plans to spin off the premium brand Penfolds have been cancelled, according to US media.
Instead, TWE is planning to focus on the international market and especially on the USA. According to the reports, three new divisions are to be established: Penfolds, Treasury Premium Brands and Treasury Americas. Several entry-level brands are to be sold, which is expected to yield about 300 million AUS dollars. This focus on the US market is supposed to compensate for the loss of sales from China in this´premium segment.
Only a few days ago, the company presented its latest project, a range of high-end wines from Penfolds in the Napa Valley, with the most expensive wine costing around $950. These wines could also be a way to maintain a presence in the Chinese market with Penfolds while avoiding tariffs.
For the first half of the business year, TWE recently reported a 43 percent decline in net profit to AUS$120.9 million (about €78 million). Net sales fell by 8 per cent to 1.4 billion (approx. 900 mill. €) dollars. Profit from sales in the Chinese market fell by 37.1 percent.