Penfolds wineBusiness

TWE to make Penfolds wine in China

Treasury Wine Estates has announced it will launch a Chinese-made version of its famed Penfolds wine later this year.

The red blend will cost between $30 and $50 a bottle, with winemaking trials currently underway using using grapes from Ningxia, in China’s central-north, and Shangri-La, in the south-western Yunnan province.

CEO Tim Ford said the red blend had passed the strict quality controls set out by Penfolds winemakers, including chief winemaker Peter Gago.

Yesterday, Ford told The Australian: “The reality is with the launch we are announcing, with our confidence around our Chinese country of origin Penfolds … we are going to start talking to customers in China pretty much from tonight and tomorrow to start to get the ball rolling,.

“China is an emerging fine winemaking region and we’re confident we can produce a premium Chinese Penfolds that maintains the distinctive Penfolds house style and uncompromising quality.”

TWE has also committed to a strategic co-operation agreement with the China Alcoholic Drinks Association, the country’s main alcohol industry body, to help build the Chinese wine industry.

“As a leading global wine producer, we have a responsibility to help build the wine category and industry in our different markets,” Ford said. “The Penfolds brand continues to be strong among consumers in China, and sharing our global expertise is part of our ongoing investment in our local team, our brands, customers, consumers, partners and the broader industry: that’s what long-term commitment to a market really means.”

The move follows hefty tariffs being placed on Australian wine by the Chinese government in 2020. TWE was hit with a 175.6% tariff, one of the harshest imposed.

As a result, earnings for TWE from the mainland China business fell to $2 million in the six months ended December 31, compared to $78.2 million a year earlier. 

TWE has also been expanding its country-of-origin strategy for Penfolds wines, with its California collection, created using Napa Valley grapes. It also plans to release a Penfolds Champagne made in France and a Penfolds using grapes from Bordeaux. These wines also do not attract tariffs in China. 

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