Penfolds has announced its intention to build a vineyard and winery in China, a significant move in the company’s efforts to localize its production. However, details regarding the timeline and specific location of the project remain unclear.
The decision follows the launch of two Chinese-produced wines in collaboration with local partners, coming at a time when tariffs on Australian wines have recently been lifted.
Tommy Tse, Director of Public Relations and Corporate Communications for Treasury Wine Estates, confirmed the plans. “We have been exploring this opportunity for over a year and are actively working on establishing our own winemaking resources in China. However, due to the complexity of the project, we cannot yet provide a specific timeline,” Tse told Vino Joy News.
Jack Wu, General Manager of Penfolds China, mentioned that Ningxia and Yunnan—two regions where Penfolds already collaborates with local producers—are being considered for the new winery. Wu noted that this initiative will not only boost Penfolds’ brand but also support the economic development of wine regions like Ningxia and Yunnan.
Despite speculation, Tse declined to confirm whether the company plans to build wineries in both regions.
China is a critical market for Penfolds, playing a key role in its global success. According to Treasury Wine Estates’ FY2024 report, Penfolds generated AUD 629 million (US$400 million) in sales revenue, marking a 34.7% increase from the previous year. China accounted for 62.92% of that total, with a surge in orders following the removal of anti-dumping tariffs on Australian wine in the fourth quarter significantly contributing to this growth.
China has become central to Penfolds’ “multi-origin” product strategy. In 2022, Penfolds introduced “One by Penfolds,” a more affordable wine series with products sourced from France, the United States, and China. The China blend, produced in Ningxia, is priced at RMB 288 (US$40) per bottle, making it competitive in the high-cost Ningxia wine region.
In 2023, Penfolds launched a higher-end Chinese wine, CWT 521, made from 82% Cabernet Sauvignon from Shangri-La in Yunnan and 18% Marselan from Ningxia. Crafted by Penfolds’ winemaking team in partnership with Shangri-La Winery, this wine is priced at RMB 1,080 (US$150) per bottle.
Both Chinese-produced wines have received positive feedback. A Penfolds distributor, who asked to remain anonymous, mentioned that the Ningxia blend of “One by Penfolds” is the best-selling wine in the series, and the limited production of CWT 521 sold out quickly with little promotion.
Even with the removal of tariffs, Penfolds continues to focus on local production in China. The CWT 521 is produced in collaboration with Shangri-La Winery, while the Ningxia blend of “One by Penfolds” is made by Pernod Ricard.
Establishing its own winery in China will further Penfolds’ localization strategy. “Investing in fixed assets in China ensures more stable growth for Penfolds, as local production allows multinational companies to avoid trade disputes such as anti-dumping measures,” added the distributor.
