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May 19, 2022

Treasury Wine Estates looks to kill two birds with one Chinese stone as Penfolds heads east

Coming soon: Penfolds China Cabernet Sauvignon?

By Olly Wehring

Treasury Wine Estates is extending the ‘multi-regionality’ of its Penfolds flagship brand in a move that would bypass Chinese trade barriers to Australian wine.

Four years on from unveiling the strategy shift for Penfolds, the brand owner confirmed today that a China-sourced version of the brand will launch domestically in the second half of this year. The group has been running trials in the country’s Ningxia (cental-north China) and Shangri-la (south-west) regions, resulting in “promising characteristics in fruit quality and flavour expression, infrastructure and vineyards”.

Specific release details were not disclosed, although the first wine from the trials, made from grapes grown in Ningxia, will be a “modest-sized allocation”, according to TWE.

The addition of a China-sourced extension builds on the expansion of Penfolds’ portfolio to include a four-strong range of red wines made from predominantly Napa Valley Cabernet parcels, unveiled last year. Treasury already produces a Penfolds baijiu-infused Shiraz as well as a brandy that also uses the Chinese spirit in its fortification process.

The development is soundtracked by Chinese authorities’ introduction in late-2020 of high tariffs on wine from Australia, a move that saw TWE’s sales in the market virtually wiped out.

“The Penfolds brand continues to be strong among consumers in China,” said CEO Tim Ford. “Sharing our global expertise is part of our ongoing investment in our local team … and the broader industry. China has always been an important market for us and we look forward to continuing to deepen our relationships and affinity with our consumers and the broader Chinese wine community.”

TWE also announced a “co-operation” agreement with the China Alcoholic Drinks Association today. The brand owner will share “technical knowledge and expertise” with the trade organisation in the hope of developing a successful domestic production footprint.

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