A Penfolds vineyard and a winery are among Treasury Wine Estates’ (TWE) ambitious plans for China in the coming years, as the market reignites.

Australian wine exports increased in value by 17% to $2.2 billion in 2023–24, the highest level since the 12 months ended September 2021, and volume remained relatively steady at 619 million litres according to Wine Australia’s latest Export Report.

The growth in value was due to a surge in exports to mainland China in the last three months of the financial year, as Australian wine re-stocked supply pipelines following the removal of the duties on Australian bottled wine in late March 2024.

TWE has responded to demand by increasing its headcount in China by 67% to 200 and is forecasting of double-digit profit growth for the Penfolds brand over the next three years.

The company’s EBITS increased 12.8% to $658.1 million in FY24 driven by strong Luxury portfolio growth in Penfolds and Treasury Americas.

Managing Director of Penfolds Tom King told analysts last week that the brand had report another strong result in what was a very exciting year “as we emerged from the tariff period continued to deliver excellent momentum across our key global markets and achieved record luxury wine intake from the 2024 vintage”.

“A highlight of the year was without doubt being able to immediately recommence shipment of our Australian portfolio into China upon the removal of tariffs, reflecting the comprehensive planning of our team,” he said.

“It’s been fantastic to see the positive response from our customers. I was in China last week and saw firsthand the energy and buzz around the return of Penfolds Australian portfolio into the market.

While it’s early days, our key performance indicators, which include shipping through the June quarter, initial depletion performance and transition to reordering by our customer base give us confidence around the demand for Penfolds in the market and our long-term growth plan.

“And whilst much is being said about the current consumer environment in China, we continue to see the market as a highly attractive long-term growth opportunity for Penfolds, and we intend to play a key role in leading the revival of the wine category, particularly from fiscal 2026 when we will see a significant step-up in the availability of our Bin and Icon wines.”

Penfolds released its 2024 collection in China earlier this month, which King described as a “great success with a strong consumer response and the magnitude of in-store pricing increases generally in line with the changes that we announced in late June”.

Penfolds volume and NSR increased 30% and 21%, respectively, with NSR over $1 billion for the first time, driven by strong momentum in Asia with standout results achieved in Hong Kong, Thailand and Taiwan, in particular, along with the benefit of the shipments to China in the fourth quarter.

“We still see great opportunity to expand distribution and availability and grow consumer demand throughout the region with our highly targeted approach, which focuses right down to the individual account level in our priority markets,” King said.

“We were ready to ship in very early April. So we made a fast start on getting stock into market, smooth customs clearances and since then over the May and June and into July period, the stock has been arriving and working its way through our distribution channels. The initial read on depletions from our customers in market has been positive and they’re now in a position where they are or will be reordering in Q1, which is a great position to be in.

“We feel pretty good about the market we’re going back into because of the strength of our brand and the demand that we see continuing to exist at the top end. So feeling pretty confident, very pleased with how the plan has been executed.”

Penfolds’ general manager for China Jack Wu told China Daily that the company intends to open a vineyard and winery in China to further invigorate the Penfolds brand and drive economic growth in wine-producing regions such as Ningxia Hui.

“Attracting young consumers, conducting cross-industry marketing strategies and developing business on digital sales platforms will be our priorities to grow in China over the next three years,” he added.