Penfolds will release a ‘made in China’ wine late this year amid punishing tariffs
Up-market Penfolds wine will be made in China for the first time, which will side step punishing tariffs imposed on Aussie winemakers.
Penfolds is launching a wine sourced and made in China, targeted at 52 million regular wine drinkers, which will bypass punishing tariffs slapped on Australian-made wine that has kept local winemakers shut out of the lucrative market.
The “made in China” wine is Penfolds first step into a burgeoning Chinese wine industry where local vineyards are capturing the growing attention of outsiders.
From its spiritual home in South Australia where it has been making wine for 178 years, Penfolds will now spread its wings to some of China’s most promising wine grape growing regions of Ningxia, in the country’s central north, and Shangri-la in the southwestern Yunnan province.
The “made in China” Penfolds wine will be a range of red blends priced at the lower end of luxury wine, also known as entry level luxury wine, and cost local Chinese buyers the equivalent of between $30 and $50 a bottle. They will be released later this year and only for the domestic China market at this stage.
Tim Ford, the chief executive of Treasury Wine Estates, the Australian global wine giant whose portfolio includes the luxury Penfolds brand, believes there is huge potential to quench the thirst of drinkers in China looking for homegrown luxury wines that also has the moniker of the trusted “Penfolds” writing on the bottle.
This is despite growing friction between Beijing and Canberra and the prickly trade relationship the two nations now have, that led to massive tariffs of more than 200 per cent saddled on Australian wine last year that snuffed out a $1bn-plus market for the local winemaking industry. Of course, given the new Penfolds wine is made in China it won’t attract tariffs.
“The reality is with the launch we are announcing, with our confidence around our Chinese country of origin Penfolds … we are going to start talking to customers in China pretty much from tonight and tomorrow to start to get the ball rolling,” Mr Ford said.
“China is an emerging fine winemaking region and we’re confident we can produce a premium Chinese Penfolds that maintains the distinctive Penfolds house style and uncompromising quality.
“As a leading global wine producer, we have a responsibility to help build the wine category and industry in our different markets. The Penfolds brand continues to be strong among consumers in China, and sharing our global expertise is part of our ongoing investment in our local team, our brands, customers, consumers, partners and the broader industry: that’s what long-term commitment to a market really means,” Mr Ford said.
It’s not the first time the Penfolds brand has been stretched beyond Australia’s shores. In 2018, Penfolds began sourcing grapes from across the Napa Valley in the US and later released its California collection. It has also unveiled plans to release a Penfolds Champagne made in France and a Penfolds using grapes from Bordeaux.
But sourcing grapes from China is a whole new world, with Chinese wine — despite having a history that stretches back to 2,600BC — only a new player in the modern wine industry.
Mr Ford said producing locally in China is a natural next step for a brand that’s been at the forefront of the global luxury wine movement for 178 years.
“Penfolds has continued to grow across our priority markets despite the Covid-19 pandemic, showing its appeal to a diverse range of quality-focused consumers. China has always been an important market for us, and we look forward to continuing to deepen our relationships and affinity with our consumers and the broader Chinese wine community,” said Mr Ford.
The groups’ first trial wine made from grapes sourced in the Ningxia region will feature in the initial, modest-sized allocation for distribution to local consumers. Penfolds winemakers and the broader Penfolds team based in Shanghai and Beijing will continue to collaborate with local growers, production partners, industry organisations, and local communities to drive the growth and expansion of the Chinese-sourced wine category.
Treasury Wine’s Shanghai-based boss for Penfolds, Tom King, said the latest move builds on the company’s investment in the local team, customers, consumers and partnerships.
Mr King said the trade disputes and friction between China and Australia – which culminated in the tariffs – should not impact the customer reception within China for the new Penfolds China wine.
“What we have experienced over the last 18 months since the anti-dumping duties were introduced was pretty strong continued demand for Penfolds and obviously we have been heavily constrained in terms of the ones that we’ve been able to offer.
“At a consumer level we are still seeing pretty strong demand and desire, connection to Penfolds as a brand.
“But it’s a long journey ahead, we are very positive about the potential of making Penfolds wine in China and our winemaking team are pretty excited about the different types of ones that we might produce over the long term.”
