By Christine Chen and Shivangi Lahiri
SYDNEY (Reuters) – On Monday, Treasury Wine Estates in Australia withdrew its earnings forecast for 2026 and suspended a A$200 million ($130 million) share repurchase plan, attributing the move to disappointing sales of its premier Penfolds wines in China and distribution issues in the U.S.
This news resulted in a significant 14% drop in Treasury’s shares, bringing them down to A$5.99, the lowest level observed in over a decade.
The company reported that Penfolds sales in China had come in weaker than anticipated, largely due to shifting alcohol consumption patterns, such as a decline in large banquets.
China has been crucial for the growth of the Melbourne-headquartered winemaker following the lifting of stringent import tariffs that previously restricted access to the market for more than three years.
The company stated, “If the performance trends indicated by preliminary data persist through F26, Penfolds depletions targets for F26 in China are unlikely to be met.”
Consequently, they deemed it inappropriate to uphold low- to mid-double-digit earnings growth forecasts for Penfolds in 2026 and the targeted 15% growth for fiscal 2027.
According to RBC Capital Markets analyst Michael Toner, “The complete withdrawal of guidance for Penfolds in FY26 and FY27 underscores the significant uncertainty stemming from changing consumption trends in China.”
In the U.S. market, Treasury has faced interruptions due to the departure of its California distributor, Republic National Distributing Company (RNDC).
The shift to new distributor Breakthru Beverage Group is anticipated to result in a sales loss of approximately A$50 million, with discussions ongoing regarding around A$100 million worth of inventory managed by RNDC.
These challenges prompted Treasury to retract its overall earnings projections for the fiscal year 2026 and to halt its planned share buyback program initially announced in August. Up to this point, they have repurchased about A$30 million in shares.
Toner described the suspension of the ongoing buyback as “unexpected,” yet “prudent in light of the short-term trading volatility.”
The winemaker indicated that several strategies are being introduced to lessen the impacts of a declining Chinese market ahead of June 2026, one of which involves reallocating products to select customers in other vital markets.
Treasury is set to conduct its annual general meeting on Thursday.
($1 = 1.5333 Australian dollars)
(Reporting by Christine Chen in Sydney and Shivangi Lahiri in Bengaluru; Edited by David Gregorio, Diane Craft, Sherry Jacob-Phillips, and Sonali Paul)
