Treasury Wine Estates personalising Penfold brand in America and China
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Treasury Wine Estates personalising Penfold brand in America and China

Treasury Wine Estates (TWE) the Australian wine maker behind iconic label Penfolds, is choosing to take its flagship brand into new territories. The company has announced that it’s establishing a Californian red wine and a fortified wine “infused with the Chinese spirit Baijiu” to help it conquer the world. While some journalists have questioned whether going beyond the brand’s Australian roots will damage it, Penfolds’ chief winemaker, Peter Gago, has been resolute in his response. The risk, he says, is “zero”.

Treasury Wine Estates’ share price has risen by 5% so far in 2018

graph 0507 treasury wine estate

SOURCE: Yahoo Finance

Mr. Gago said: “If you're not moving forward, you're going backwards,” and told the press that he was aiming “right at the top,” by hoping to create a cabernet that was “a prestigious wine with similar cache to Penfolds Grange.”

Meanwhile, the company is looking to appeal to Chinese consumers with a taste of home. After a difficult year in the country so far (issues appeared in regards to getting TWE’s wines into China, holding back its share price), the company thinks a Baijiu-infused fortified wine can help it connect with Chinese drinkers. Thanks to links with an experienced distiller in Sichuan province, TWE says a “special Baijiu made from sorghum” could be used in the new wine. Baijiu is the world’s most popular spirit – in large part due to its ubiquity in China.

TWE’s CEO, Mike Clarke, said that multi-region sourcing and innovation "brings excitement and energy into established brands,” and that "Innovation of this nature plays a critical role in driving long-term, sustainable growth for the company as we broaden brand appeal and offerings to consumers around the world."

Mr. Clarke also reiterated that the company has no oversupply issues in China, and Mr. Gago added that Penfolds has always had an ethos of “pioneering experimentation.”

Disclosure

Dominion holds Treasury Wine Estates in its Global Trends Luxury Fund.


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