Treasury wine stocks fell to their lowest levels in a decade as problems escalated in China and the United States

Written by Christine Chen and Shivangi Lahiri

SYDNEY (Reuters) – Australian treasurer Wine Estates on Monday withdrew its 2026 earnings guidance and paused a A$200 million (US$130 million) share buyback, citing weak sales of its flagship Penfolds wine in China and distribution challenges in the United States.

The announcement sent shares of Treasury, one of the world’s five largest winemakers by volume, falling by 14% to 5.99 Australian dollars, their lowest level in more than 10 years.

The Treasury said Penfolds sales in China were weaker than expected due to changing alcohol consumption habits, including fewer large-scale banquet events.

China has played a pivotal role in the Melbourne-based winemaker’s growth since Beijing rose sharply Import tariffs Which kept the iconic brand off the shelves for more than three years.

“If the performance trends indicated by preliminary data continue through F26, Penfolds’ F26 attrition targets in China are unlikely to be achieved,” the company said.

As a result, it said it was no longer appropriate to maintain Penfolds’ guidance for low- to mid-double-digit earnings growth in 2026 and 15% earnings growth in fiscal 2027.

“The complete withdrawal of Penfolds’ guidance in FY26 and FY27 indicates the high level of uncertainty stemming from evolving consumption dynamics in the Chinese market,” RBC Capital Markets analyst Michael Toner said.

In the United States, the Treasury Department said its operations were disrupted by the exit of its California distributor, Republic National Distribution Company (RNDC).

It said the move to new partner Breakthru Beverage Group would cost about A$50 million in sales, with negotiations ongoing over approximately A$100 million of stock held by RNDC.

The setbacks led Treasury to withdraw its group-wide earnings forecast for the 2026 financial year and halt a planned A$200 million share buyback program announced in August. It has already bought back about A$30 million worth of shares.

RBC’s Toner said the pause on the remainder of the buyback was “unexpected” but “prudent in our view in the context of near-term trading uncertainty.”

The winemaker said several initiatives had been implemented to mitigate the effects of a weaker Chinese market in the year to June 2026, including pursuing opportunities to reallocate product to specific customers in other key markets.

The Treasury Department is scheduled to 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 Kraft, Sherry Jacob Phillips and Sonali Paul)