As global wine consumption hit its lowest since 1961 in fiscal 2025, Treasury Wine Estates (TWE) defied the odds, boosting earnings (EBITS) by 17% to AUD770.3 million. Fine wines, led by Penfolds and DAOU, powered 85% of group earnings, cementing TWE’s leadership. Despite China’s volatile rebound and soft demand in the U.S. and Europe, TWE’s fine wine strategy and bold innovations are redefining success in a turbulent market.
Penfolds: Innovation With Global Reach
Penfolds marked its 180th anniversary with Grange La Chapelle 2021—a South Australian Shiraz and Rhône Syrah blend that drew global collectors. In China, net sales revenue (NSR) rose 6.8% to AUD1.07 billion, with depletions in Asia ex-China up 18%. E-commerce sales grew 6%, reflecting demand for limited-edition Bin series. The AUD130 million acquisition of Ningxia’s Stone & Moon Winery boosts local production, meeting demand for premium domestic wines. Penfolds’ earnings grew 13% to nearly AUD480 million, with margins above 44%, proving its brand power.
Penfolds’ global prestige found a counterpart in the U.S., where DAOU led fine wine growth.
DAOU Drives U.S. Fine Wine Growth
DAOU, the top U.S. fine wine brand, saw its Discovery Cabernet lead the category, lifting NSR by 8.2%. This drove Treasury Americas’ 15.1% NSR growth to AUD1.17 billion and 34% earnings jump to AUD309 million. Frank Family Vineyards added 3.7% NSR growth, while the revamped Beaulieu Vineyard brand home attracted visitors with immersive tastings. The Drop of Sunshine range, launched with Hello Sunshine, targeted younger, lifestyle-driven consumers. A distributor shift to Breakthru Beverage Group in California may impact NSR by USD50 million in F26, but TWE’s mitigation efforts show adaptability.
Beyond fine wine success, TWE is shaping consumer trends with low/no-alcohol innovation.
TWE Bets Big on Low/No-Alcohol
TWE’s AUD15 million Barossa Valley facility, using patented flavor-retention technology, launched the 8% ABV Sorbet range—blending Prosecco and Shiraz with passionfruit and mango notes. Squealing Pig’s NoLo line doubled sales in UK supermarkets, gaining popularity in social settings. Spanning Matua, 19 Crimes, and Wolf Blass, TWE’s NoLo portfolio builds on its 1993 Seppelt legacy. With IWSR forecasting 5% annual NoLo growth through 2028, driven by 50% of wine drinkers seeking lower-alcohol options, TWE leads the category. Sustainability is vital: 100% renewable electricity powers global operations, 98.4% of vineyards and wineries hold certifications, and CSIRO-partnered mildew-resistant grapevines cut chemical use in Coonawarra and Barossa, backed by AUD50.4 million in capital spending.
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While innovation drives growth, TWE’s premium portfolio faces challenges.
Premium Brands: Strength in a Tough Market
Premium and commercial wines saw NSR fall 7.2% to AUD694 million and earnings drop 32% to AUD55 million, hit by weak demand in Europe and Australia. Yet, Squealing Pig delivered 11.2% NSR growth in Australia and the UK, its Squealini Spritz tapping demand for lighter wines. Rawson’s Retreat thrived in China, gaining favor in urban wine bars. The Treasury Collective division, launched July 1, 2025, prioritizes growth brands to stabilize performance.
TWE’s agility shines in navigating a volatile global market.
Market Headwinds: China’s Volatility and Beyond
China’s wine market surged 123% to AUD893 million after tariff removal but slumped 35% in Q2 2025, leaving it at just one-third of its 2019 peak. Shifting to intimate, lifestyle-driven occasions, China required new strategies, with e-commerce sales rising 6%. U.S. exports fell 12% to AUD314 million, facing competition from craft beer and ready-to-drink cocktails, while the UK saw a 6% volume drop to 204 million liters. Southeast Asia grew 4%, showing regional strength. TWE’s digital investments and flexible sales strategies counter these shifts.
Looking Ahead: A Fine Wine Future
For F26, Penfolds expects low to mid double-digit earnings growth, fueled by Bin & Icon releases in Q4. Treasury Americas projects modest growth, with DAOU synergies reaching USD30 million. Treasury Collective anticipates stable NSR via priority brands. Long-term, TWE’s multi-region strategy (Australia, U.S., France, China), NoLo expansion, and sustainability focus ensure leadership. The CEO transition to Sam Fischer on October 27, 2025, may sharpen this vision. A 40-cent dividend (+11.1%) and AUD200 million share buyback underscore management’s confidence.
As the wine industry grapples with shifting tastes and economic pressures, TWE’s fine wine-first approach—blending heritage, innovation, and sustainability—offers a blueprint others will study, pioneering trends like low-alcohol wines and eco-conscious production.
