Australia’s wine industry is undergoing significant upheaval as two of its largest players, Treasury Wine Estates and Vinarchy, take steps to counter falling global demand and operational challenges, particularly in the United States.
Treasury Wine Estates, the owner of iconic brand Penfolds, has downgraded its full-year earnings forecast due to weakening sales in the US market. The company now expects earnings before interest and tax (EBIT) of $770 million for the 12 months ending June 30, 2025, down from a previous estimate of approximately $780 million.
The company attributed the reduced forecast to economic uncertainty in the US, exacerbated by tariff plans announced by President Donald Trump. Treasury Wine reported that premium wine shipments had declined, with the sharpest impact felt in the sub-$US15 ($23) price segment. Compounding the issue, Republic National Distributing Company (RNDC), which managed a quarter of Treasury’s US sales, is set to cease operations in California on September 2. Treasury Wine said it is working to secure new distribution partners in the region.
The closure of RNDC’s California arm presents a serious challenge for Treasury, which has invested over $2 billion in its US operations since 2021, including a $1.6 billion acquisition of Daou Vineyards in 2023 aimed at expanding its luxury wine portfolio. Despite the distributor setback in California, Treasury said its broader relationship with RNDC across 24 other US states remains intact.
Meanwhile, rival wine producer Vinarchy, formerly known as Accolade Wines, is undertaking a major restructuring of its South Australian operations. On Tuesday, the company announced it would shut the cellar door and restaurant at Rolf Binder Wines in the Barossa Valley, as well as the Banrock Station cellar door in the Riverland. Additionally, winemaking operations at St Hallett in the Barossa and Hardy’s Tintara in McLaren Vale will be consolidated at the Rowland Flat winery, which produces Jacob’s Creek. The consolidation will be supported by a $30 million upgrade to the Rowland Flat facility.
Vinarchy’s chief supply officer, Joe Russo, described the changes as essential to maintaining competitiveness amid sustained global challenges. The company, now under the control of a consortium led by Bain Capital Credit following a transfer of ownership from US-based Carlyle Group, is focusing resources on its most prominent labels, including Jacob’s Creek, Hardys, and Campo Viejo. In May, it announced plans to cull about 50 of its 150 wine brands to streamline operations and boost investment in its flagship products.
The restructuring efforts by both Treasury Wine and Vinarchy come as the broader wine industry grapples with a supply glut and shifting consumer preferences. Wine consumption is in decline globally, particularly among younger demographics, who are increasingly favoring ready-to-drink spirits and non-alcoholic alternatives.
As the Australian wine sector navigates mounting economic pressures and changing market dynamics, industry leaders are betting on consolidation, brand focus, and operational efficiency to weather the storm.
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