If you’ve ever enjoyed a glass of Penfolds or poured a cheeky Seppelt at a family gathering, you’re not alone.
These are just a couple of the iconic labels under the Treasury Wine Estates (TWE) umbrella, one of Australia’s biggest names in wine.
But even the best drops can’t escape the unpredictable world of global politics and trade, as TWE has just discovered the hard way.
Tariffs, trade wars, and tumbling profits
TWE has announced that the ongoing economic fallout from former US President Donald Trump’s tariffs is set to take a $10 million bite out of its annual profits.
The company has revised its full-year earnings forecast down to around $770 million, a dip from the $780 million it was expecting just a few months ago.
What’s behind the drop? It’s a cocktail of factors, but the main culprit is a slowdown in the US market, particularly for wines priced under USD 15.
With economic uncertainty swirling and American consumers tightening their belts, TWE’s ‘Premium’ portfolio has taken a hit.
And it’s not just wine feeling the pinch—big names across retail and logistics, from Target to UPS, have also reported weaker sales or trimmed their forecasts in the wake of the tariffs.
A closer look at the us market
You might be wondering: just how much does the US matter to an Australian wine giant? Quite a lot, as it turns out.
Treasury Americas, the company’s US arm, contributed a hefty 36 per cent of group earnings in the first half of the year. Interestingly, only 15 per cent of its US portfolio is made up of Australian and New Zealand wines—the rest is produced stateside.
This local production was supposed to shield TWE from the worst of the tariffs, but the broader economic uncertainty has still managed to leave its mark.
Distributor drama in California
As if tariffs weren’t enough, TWE has also been hit with a curveball from one of its major US distributors.
Republic National Distributing Company (RNDC), which handles TWE’s wines in 25 states, has announced it will cease operations in California from September.
That’s a big deal: RNDC California accounts for about a quarter of TWE’s US revenue and 10 per cent of its global revenue.
The good news? The closure won’t affect this year’s results, and TWE is already on the hunt for new distribution partners in California.
The company is confident it can weather the change, pointing to its long history of successfully managing distributor transitions.
RNDC, for its part, says it remains committed to TWE in the other 24 states where it operates.
Why did RNDC pull out?
RNDC’s decision to exit California comes after it lost contracts with several major suppliers, including brewing giant Anheuser-Busch.
The company says it’s working to ensure a smooth transition for affected employees and is meeting all its regulatory obligations.
Australian wine’s rocky road in the us
This isn’t the first time TWE has had to navigate choppy waters in the global wine market.
After China slapped tariffs on Australian wine during the pandemic, TWE doubled down on its US operations, even splashing out $1.4 billion to buy California’s DAOU Vineyards in late 2023.
The move was a bold bet on the continued growth of the US luxury wine segment, where bottles can fetch more than USD 30 a pop.
But as this latest setback shows, even the best-laid plans can be upended by forces beyond a winemaker’s control.
What does this mean for Australian wine lovers?
For now, you’re unlikely to see immediate changes on your local bottle shop shelves.
But the ongoing turbulence in global markets is a reminder that the price and availability of your favourite tipple can be affected by events half a world away.
If TWE and other producers face higher costs or distribution headaches, those could eventually trickle down to consumers.
A resilient industry—and a resilient palate
The Australian wine industry has weathered its fair share of storms, from droughts and bushfires to trade wars and pandemics.
Through it all, our winemakers have shown remarkable resilience and ingenuity. TWE’s quick moves to find new distributors and invest in premium US brands are just the latest example of this adaptability.
Your say: Have you noticed changes at the bottle shop?
Have you noticed your favourite wines getting pricier, or have you switched to new labels as a result of changing prices and availability? Do you think Australian wine companies are doing enough to adapt to global challenges? We’d love to hear your thoughts and experiences—share your comments below and join the conversation with fellow wine lovers!
Also read: Trump tariffs spark ‘unusual’ shift in Australian dollar
