Treasury Wine Estates has pulled its earnings guidance and paused a A$200 million share buyback in response to weak sales in China and distribution issues in the U.S. 

Treasury explained that sales of Penfolds in China were much weaker than expected, which it said was due to changing alcohol consumption habits. 

The company continued, “If the performance trends indicated by the preliminary data continue through FY26, Penfolds depletion targets for FY26 in China are unlikely to be achieved.” 

As a result of the news, shares dropped by 14%, marking the lowest point in more than 10 years. 

The company also announced problems in the U.S. According to Treasury, its operations were disrupted by the exit of its distributor in California, Republic National Distributing Company (RNDC). 

It continued that the transition to its new partner, Breakthru Beverage Group, is set to cost around A$50 million in sales, with negotiations ongoing over inventory held by RNDC. 

Due to the challenges in China and the U.S., Treasury has paused the remainder of its ongoing share buyback, which it described as “unexpected.” 

It added that several initiatives were being implemented to mitigate the impacts of a weaker Chinese market, including a reallocation of product to select customers in other markets. 

On the subject, it further stated: “TWE remains committed to maintaining the long-term strength and equity of the Penfolds brand through pricing discipline across all markets.” 

The winemaker is set to hold its annual general meeting this Thursday (16 October), at which further updates are expected.