Treasury Wine boss Tim Ford sees huge potential in China

Tim Ford doesn’t just want to pack product off to China never to be seen again; he believes his Treasury Wine Estates and Penfolds brand can be a driving force in that country’s wine community.

Treasury Wine Estates in 2023 named China as Penfolds newest global sourcing region.

Treasury Wine Estates chief executive Tim Ford sees the recent acquisition of a small winery called Stone & Moon in China’s Ningxia region as the perfect base for his Asian expansion plans.

“The Stone & Moon winery from a capacity point … gives us room for expansion,” said Mr Ford, who has more than two decades of experience in the wine, food and beverages industries and has led Treasury Wine since 2020.

“It’s enough capacity for us to be able to grow our Chinese portfolio for Penfolds for the next two to three years as a basis, which is what we were looking for.

“And then we can continue to expand that over time.

Penfolds’ vineyards in China.

So the winery capacity is good, the technology in the winery is what we were seeking, it’s got a really, really nice cellar door attached to it so … in the future, it can also become the brand home for Penfolds in China for the Chinese portfolio. So it’s got a lot of pieces of the puzzle.”

Mr Ford has seen the best and worst of the Chinese market, from the crippling tariffs that kept his wine mostly locked out of the country for years to the boom in China’s wine consumption that before the tariffs generated the bulk of his profitability.

The region is alive once again as the market reopens for business and Chinese clamour for his wine, which include Penfolds, Australia’s only truly luxury brand.

In 2023 that “Penfolds Made in China” dream became more in focus when Treasury Wine launched a $150-a-bottle red wine from Chinese grapes as part of its 2023 Penfolds Collection.

Treasury Wine Estates chief Tim Ford.

Penfolds’ China Winemaking Trial 521, as it was called, was launched in China and sources grapes from Yunnan Province in China’s southwest, and Ningxia in north-central China.

It joined a growing global Penfolds collection, that also included a $1000-a-bottle 2019 Grange from Australia, a $1000-a-bottle 2019 Quantum wine from California, and a $500-a-bottle Cabernet Sauvignon Merlot from France.

This compliments nicely too the wine labels it will own as part of the Stone & Moon deal, with that brand selling for as much as $400 a bottle and seen as quality wine among Chinese drinkers.

But ultimately the bulk of the fruit at the Stone & Moon winery will eventually become “Penfolds Made in China” wines.

And while Treasury Wine has been busy buying up vineyards and grapes in California and France, the push into China heralds a new growth agenda that aims to give the Melbourne-based winemaker a direct link to the Chinese wine market by owning actual vineyards – rather than simply pouring wine into shipping containers and waiving them goodbye as they head to Chinese ports.

As part of Mr Ford’s strategy he wants the Stone & Moon winery to eventually become the new Chinese home for Penfolds, book-ending the traditional and spiritual home of Penfolds in Magill Estate, South Australia.

The Stone & Moon winery in northwest China's Ningxia Hui region.

“It’s worth reminding that Magill will always be the home of Penfolds. That has been our home for a long, long time, and continues to be so,” he said.

“But this is a similar strategy to what we’ve done within France, where we acquired a chateau and some vineyards and winery assets there called Chateau Lanessan a few years ago, which becomes the centrepiece for production in the first instance, but then enables us to have that brand home for the locally produced wines in France and Bordeaux from the first instance.

“And now we’re rolling out a very, very similar strategy in Ningxia in China.

“So we think that’s important, but you then become part of the tourism within that local industry and the local community as well, not just producing the wine for that region.

“We think it is really important being part of building the category in China, we can really play a great role in that not only with our brands and our wines from Australia and America and other portfolios but also we can help really drive the success of the local Chinese wine category and wine industry.”

Treasury Wine wants to encourage wine tourism in China. Picture: Shannon Fagan

Mr Ford said while Ningxia was in the northwest of China and far away from major cities such as Shanghai, the provincial government had a heightened focus on tourism with wine being a part of that.

“It’s becoming more and more part of the psyche of the Chinese consumer to visit the Chinese winemaking region. So that will grow over time,” he said.

Mr Ford said that since crippling 200 per cent-plus tariffs were removed from Australian imported wine by the Chinese government the Penfolds brand had been welcomed back with open arms by local drinkers who had always had a strong connection to the brand.

“I think the demand for Penfolds since the tariffs have been removed is in line with the plan that we expected, which is great, and we had some pretty good objectives, but it’s more so the investment, both the team and the brand that we’ve put back into that market, which we have stepped up, obviously, as we’ve reallocated the wines to China,” he said.

“But we’re seeing the pull through, we are seeing the demand. Our customers are loving having Penfolds back in their portfolios to sell; having that number one brand back in the market is good news for everybody, really.”

Originally published as Treasury Wine boss Tim Ford sees huge potential in China