Australian wine giant, Treasury Wine Estates (TWE) is recalibrating its expectations as demand weakens in its 2 largest export markets, US and China.
According to its new Chief Executive, Sam Fischer, the company is now prioritising on brand protection, cost cuts and balance sheet discipline over market expansion.
Treasury will also take drastic actions to protect its prestigious Penfolds range against parallel imports (the grey market) and counterfeiting, especially in China.
It is also abandoning its share repurchasing programme at the same time as flagging a review of dividends, potential sales of non-core assets, and reconsideration of planned capital investment.
All these happen amidst the company announcing a 40% plunge in its revenue for the 6 months ended December 2025, far below its earlier earnings expectations.
Fischer said, “We are currently experiencing category weakness in the US and China, 2 of our key growth markets, which will impact our business performance in the near term. Maintaining the strength of our brands and the health of their respective sales channels is of critical importance as we navigate through the current challenging environment.”
Fischer added that despite the negative outlook, the company is positioned for long-term growth through a company-wide transformation program called TWE Ascent, which has a target of generating A$100 million (US$68.8 million) per annum in cost improvements, with initial benefits expected to be seen in 2027 and full realisation within 3 years.
In China, TWE plans to cut inventories while shipments contributing to parallel imports will also be significantly restricted. In the US, tariffs on Australian wines are expected to hit TWE earnings as well.
Despite the 2 markets slowing down, other regions like Europe, the Middle East and Australia seem to be performing according to expectations.
