As Penfolds launches its Californian wine, will it diversify products for Chinese market?
(Feb 18, 2021, Shanghai) – Australian wine brand Penfolds has launched its first California collection as part of a venture to expand operations beyond its home base.
Unveiled in Napa Valley on February 17, the new range includes the Bin 600 Cabernet-Shiraz, the Bin 704 Cabernet Sauvignon, and super-premium Bin 149 Cabernet Sauvignon. The selection also features the company’s latest iconic wine, Quantum Bin 98 Cabernet Sauvignon. All the wines are from the 2018 vintage.
Quantum Bin 98 Cabernet Sauvignon and Bin 149 Cabernet Sauvignon are blended with a small percentage of Australian wine, 13% Cabernet Sauvignon and 14% Shiraz, respectively. Labelled as Wines of the World, Penfields’ Chief Winemaker, Petar Gago, explained this is to add structure and complexity.
Penfolds has been actively attempting to diversify from its Australian roots in recent years. In 2018, the company unveiled a baijiu-infused Shiraz known as Lot. 518, and a brandy named Lot. 1990 under the banner of Penfolds Special Bottlings range. In 2019, Penfolds collaborated with Champagne house Thiénot to create three Champagnes from the 2012 vintage. In the same year, the company also bought vineyards and assets in France.
In China, one of Penfolds’ chief markets, these activities have been regarded as a route to optimizing its brand and attracting new consumers with products that resonate with local consumers. Onlookers perceive mitigation of fallout from Sino-Australia political risks is also part of its strategy.
Penfolds’ parent company, Treasury Wine Estates (TWE) is the powerhouse for Australian wine in the China market. Led by TWE’s Australia portfolio, Australian wines have taken over French imports. From May 2019 until November 2020 when China slapped up to 200% tariffs on Australian wine, it had the biggest share of the country-of-origin wine market in China.
TWE has also just announced its interim F21 results. The company announced global pandemic-related disruptions to higher-margin luxury wine sales channels in key markets. Additionally, it reported reduced shipments in China because of anti-dumping and countervailing investigations initiated by the Chinese Ministry of Commerce (MOFCOM) which led to the NSR falling 8%.
TWE also announced that from F22, it will operate under three new divisions: Penfolds, Treasury Premium Brands, and Treasury Americas.
In China, TWE anticipates that demand will remain severely limited while the provisional MOFCOM measures remain in place. It added that it is confident about its plans for reallocation of the Penfolds Bins and Icon range from China to other markets as it continues to engage with its customer and consumer base.
“Our first-half fiscal 2021 results demonstrate that we are making progress against our TWE 2025 strategy, despite a period of significant disruption,” TWE’s Chief Executive Officer Tim Ford commented.
