Australia's Treasury Wine surges 17% on robust China demand, new regional structure
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Bottles of Penfolds Grange wine and other varieties, made by Australian wine maker Penfolds and owned by Australia's Treasury Wine Estates, sit on shelves for sale at a winery located in the Hunter Valley, north of Sydney, Australia, February 14, 2018. RE
By Shivangi Lahiri
April 22 (Reuters) - Shares of Treasury Wine Estates rose more than 16% on Wednesday, their sharpest one-day gain in over five years, after Australia's standalone winemaker reported strong demand for its products and unveiled a new organisation model.
The vintner said depletions - sales from distributors to retailers - improved across key markets in the third quarter, underpinned by strong demand for its flagship Penfolds brand in China, Australia-New Zealand, and the rest of Asia.
Penfolds' sales through distributors in China rose 40% in the quarter ended February versus the three-month period ended January 2025, driven by strong Chinese New Year demand for premium reds Bin 389 and Bin 407.
Penfolds' depletions also rose in other key markets, up 11% in Australia-New Zealand in the third quarter, and 14% in Asia excluding China on a seasonally adjusted basis.
Treasury Americas's overall U.S. market depletions grew 9.1% in the March quarter, with them returning to growth in California.
Strong sales through the distribution channel sent Treasury Wine's shares up about 17% to A$4.72, their highest point since February 20 and the biggest one‑day gain since mid‑February 2021.
The stock was among the top gainers in the benchmark ASX200 index, which ended the session 1.2% lower. [.AX]
The winemaker said it will reorganise its operations into four divisions: the Americas; Australia and New Zealand and Europe; Greater China; and a combined emerging markets division including the rest of Asia, the Middle East, and Africa.
"We are reshaping TWE to drive clearer accountability for performance and to enable faster, more market-connected decision-making as a foundation for consistent depletions growth," said Chief Executive Officer Sam Fischer, who assumed the top role last October.
"We think this could also potentially lead to increased sales of the company's non-Penfolds products in China," Citi analysts wrote, referring to the new operating model.
The winemaker reiterated its forecast for higher second-half operating earnings compared with the prior six-month period, and said it does not expect higher costs stemming from the Middle East conflict to have a material impact in fiscal 2026.
Separately, Treasury Wine also established a new debt commitment totalling A$300 million to refinance maturities in fiscal 2027.
Citi revised its rating to "neutral" from "sell", stating that new debt commitments "collectively might incrementally reduce near-term concern on the balance sheet".
($1 = 1.3965 Australian dollars)
(Reporting by Shivangi Lahiri and Sameer Manekar in Bengaluru; Editing by Maju Samuel, Vijay Kishore and Sherry Jacob-Phillips)
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