Treasury Wine Estates’ (TWE) recent acquisition of 75% stake in small China-based winery, Stone & Moon is expected to accelerate its growth plan in China, which had recently removed tariff restrictions on Australian wine products.
TWE’s Chief Executive, Tim Ford said its US$18 million investment in the new winery offers it the technology and the sufficient capacity to grow its Chinese portfolio for Penfolds for the next 2-3 years.
The removal of the tariffs offers TWE a new sense of market opportunity, and in 2023, TWE launched a US$100 a bottle red wine from Chinese grapes as part of its 2023 Penfolds Collection. Penfolds’ China Winemaking Trial 521, as it was called, was launched in China and sources grapes from Yunnan Province in China’s southwest, and Ningxia in north-central China. It joined a growing global Penfolds collection from many countries like Australia, US and France.
Stone & Moon brand is renown for its quality wine in China, and its brand sells for as high as US$250 a bottle. As part of the deal, Stone & Moon winery will eventually become ‘Penfolds Made In China’ wine producer.
The investment in China will offer TWE a direct link to the Chinese wine market by owning actual vineyards, rather than simply shipping wine to the country. Mr Ford aims to make Stone & Moon winery the new Chinese home for Penfolds, although the traditional home will still be in Magill Estate in South Australia. This basically repeats the same strategy that TWE has been doing in France where it acquired a chateau and winery assets.
Despite the winery being located in Ningxia, far from the coastal cities of China, there is a growing focus on wine tourism where avid local Chinese consumers will visit Chinese winemaking region, leading to higher demand for its products.
Chinese consumers, according to Ford, have welcomed the massive return of TWE Penfolds wine products, once known to be the No.1 brand in China prior to the tariffs. And it will not be long before Penfolds return to be a leading wine brand in the country.
