NEWS
PENFOLDS PRICE HIKES AND ORDER RETURNS, IMMEDIATE IMPACTS AS CHINA TARIFF ENDS
By Susan Lewis
3-4-2024
Source: Treasury Wine Estates
China’s lifting of punitive tariffs on Australian wines on last Friday has seen some immediate impacts, leading producer Treasury Wine Estates (TWE) announced price increase for its top-tier Penfolds from 1 July.
Meanwhile, South Australian producer Randall Wine Group said it has received an order for some 156,000 bottles from China just hours after the tariffs were lifted.
TWE’s price rises will be worldwide on Penfolds’ Bin 389, 407, 128 and its Icon portfolio, as the producer is expecting demand to exceed supply for these labels in the near term.
“With demand for the Penfolds Bin and Icon portfolio expected to exceed availability in the short term, [Treasury Wines] will also commence working with its global customer base to finalise price increases across the Bin and Icon portfolio,” Australian media Financial Review quoted TWE as saying.
“Penfolds will retain its standardised global pricing structure in order to ensure long-term brand health and price integrity.”
While TWE has not yet announced the level of increase, some analysts have earlier estimated that the price rises could be between 5 to 7 percent.
The Randall Wine Group is owner of brands including Seppeltsfield Estate and Gemtree, it has 3700 hectares in the McLaren Vale, Barossa Valley and Clare Valley and is involved in premium bulk red wine sales.
The group used to sell a substantial proportion of its wines to China before the tariffs hit, it has lost AUD40 million (USD26m) in annual revenues since 2020.
With the 156,000 bottles of order from China it received hours after the end of the tariffs, proprietor and executive chairman Warren Randall said they are confident that they can get the lost business back.
But not all producers are so confident. South Australian producer D’Arenberg Wines has contacted 20 Chinese importers in the past months. Their reply was that they still have stocks of their wines as consuming Australian wines were considered politically incorrect in China since tariffs were slapped.
The company will now concentrate on the super-premium segment to try to restore the AUD6m annual sales lost from the tariffs.
However, the company believed it will be hard amid weaker growth in China and that the wine market there has shrunk substantially since 2020.
(the writer can be contacted at: info@thewinechronicle.com)
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