Earlier this week, Treasury Wine Estates was forced to update its economic forecast for the current fiscal year due to softer-than-expected Penfolds sales in China and challenges associated with its recent US distribution transition.

The update was announced to shareholders less than a week ahead of its annual general meeting, which was held yesterday 16 October. During his Chairman’s Address John Mullen affirmed that, despite the two short-term disruptions, TWE is “taking the appropriate actions to mitigate their impact.” He also said that, “against a backdrop of difficult economic conditions in the wine industry, TWE’s long-term fundamentals remain strong.”

Shortly after this, Mullen, who is also the chairman of Qantas and Brambles, was questioned by some shareholders as to whether his other commitments are impacting his ability to fully perform his responsibilities at TWE.

According to Reuters, one asked: "Can John point to any other person in recent history who has simultaneously chaired three ASX 100 companies?," to which Mullen responded that his commitment was “absolute and that he was devoting “adequate” time.

John Mullen was later re-elected with a vote of 84.64 per cent in favour.

Chairman explains China slowdown:

During his annual general meeting speech, Mullen addressed both of the market challenges impacting TWE over the near-term.

Starting with Penfolds, he says “first quarter shipments were in line with expectations,” with the Penfolds 2025 Collection release being well received by customers and consumers globally. However, TWE’s results update in August revealed “softness in our depletions … as a result of evolving consumption dynamics within the alcohol sector which were impacting large-scale banqueting occasions.”

The wine business then saw “some improvement” in China in August and a “return to growth” into September, although this fell short of the business’ overall plans and roadmap.

Earlier this week, it flagged it was waiting for sales results from the recently-completed Mid-Autumn Festival period to guide its future outlook. While this data is still pending, John Mullen says “the early signs of improvement were not sustained, and while we do not yet have definitive numbers from the festival sales period, it is becoming clear from the preliminary data that our depletions in China for fiscal 26 are going to fall well below expectations if these trends continue."

To help resolve the issue, Penfolds "will now actively pursue opportunities to re-allocate product to other markets but will do so with caution to ensure that it doesn’t increase the risk of parallel imports into the China market."

Before moving to Treasury Americas, Mullen reminded shareholders of Penfolds’ strong performance in financial year 2025, which saw it grow in Asia (excluding China), Australia, and EMEA regions.

“We remain very confident in the long-term growth potential for Penfolds in China and globally,” he said.

Treasury Americas distributor transition:

Treasury Americas was recently forced to appoint a new exclusive distributor in California following the news that RNDC would be ceasing all operations in September.

“As part of our full year results, we noted that the expectation for modest EBITS growth in fiscal 26 for Treasury Americas was contingent on mitigating the impact of reduced shipments in California through negotiations with RNDC," said John Mullen. "These negotiations are ongoing, and we are still working through a number of factors including the management of inventory.”

Continuing, he affirms TWE's objective of achieving a settlement "that mitigates the full impact to fiscal 26 EBITS associated with RNDC’s closure in California. At this time, however, there is increased uncertainty that this will occur, and therefore we no longer believe it is appropriate to retain the guidance for modest EBITS growth in Treasury Americas in the year.”

What does Treasury Collective MD Angus Lilley forecast for Australian wine?

During the first two parts of Drinks Trade’s ongoing future of wine in Australia series, which asked some of the leading voices in Australian wine for their thoughts on the challenges facing the sector and on how Ausralian wine should adapt, the Managing Director of Treasury Collective told Drinks Trade that “the industry needs to stay relevant to a new generation of consumers. Drinking habits are changing, and moderation is here to stay."

Angus Lilley also said: “We must make wine approachable and exciting to appeal to more consumers in more occasions. At its heart wine has always been about connection and enjoyment, so we need to make sure consumers can find a wine that resonates with them in these key moments of connection.”