By Christine Chen and Shivangi Lahiri
SYDNEY (Reuters) – Australia’s Treasury Wine Estates on Monday withdrew its 2026 profit forecast and halted a A$200 million ($130 million) share buyback, citing weak sales of its flagship Penfolds wines in China and distribution challenges in the U.S.
The announcement sent shares in Treasury, one of the world’s top five wine producers by volume, falling 14% to A$5.99, its lowest point in more than 10 years.
The Treasury said sales of Penfolds in China had been weaker than expected due to changes in drinking habits, including fewer large-scale banquets.
China has been central to the Melbourne-based winemaker’s growth since Beijing lifted steep import tariffs that had kept the iconic label off shelves for more than three years.
“If performance trends indicated by preliminary data continue through F26, it is unlikely that Penfolds’ depletion targets for F26 in China will be met,” the company said.
As a result, it said it was no longer appropriate to maintain Penfolds’ guidance for low-to-mid double-digit profit growth in 2026 and 15% profit growth in fiscal 2027.
“The complete withdrawal of guidance for Penfolds in FY26 and FY27 speaks to the high level of uncertainty caused by evolving consumer dynamics in the Chinese market,” said RBC Capital Markets analyst Michael Toner.
In the United States, Treasury said its operations had been disrupted by the departure of its distributor in California, Republic National Distributing Company (RNDC).
The transition to new partner Breakthru Beverage Group would cost about A$50 million in sales, it said, and negotiations continue over about A$100 million of inventory held by RNDC.
The setbacks led the Treasury to withdraw its group-wide profit forecast for fiscal 2026 and suspend a $200 million share buyback program announced in August. It has already bought back around A$30 million worth of shares.
RBC’s Toner said the pause on the rest of the buyback was “unexpected” but “prudent in our view in the context of near-term business uncertainty.”
The winemaker said several initiatives were being implemented to mitigate the impacts of a weaker Chinese market in the year to June 2026, including seeking opportunities to reallocate products to select customers in other key markets.
The Treasury will hold its annual general meeting on Thursday.
($1 = 1.5333 Australian dollars)
(Reporting by Christine Chen in Sydney and Shivangi Lahiri in Bengaluru; Editing by David Gregorio, Diane Craft, Sherry Jacob-Phillips and Sonali Paul)