Treasury Wine Estates has confirmed to Vino Joy News that it is bottling its popular Penfolds Max's in China and the range will be launched this month for Chinese New Year.

Treasury Wine Estates, the parent company of popular wine brand Penfolds, has confirmed to Vino Joy News that the Australian wine giant is indeed bottling its popular Penfolds Max’s series in China’s Shandong province for the upcoming Chinese New Year holiday, after rumours of the operation started circulating online.

The rumors of Shandong-bottled Penfolds first started surfacing in late December. Online reports showed alleged back label of the China-bottled Penfolds Max’s, which specified that the wine was made and aged by Penfolds winemaker in its South Australian winery and bottled in Shandong province at a winery called Yantai Nanshan Manor.

Shandong is China’s biggest wine producing province by volume and is by far the biggest Chinese province for bulk wine imports. Roughly 82% of the country’s bulk wine enters through Shandong.

Bottling bulk Australian wine in China would allow the group to bypass China’s anti-dumping tariffs imposed on Australian wineries, as the anti-dumping tariffs only apply to bottled wines under 2 liter.

When reached by Vino Joy News, Tom King, Managing Director of Penfolds, confirmed that the company is indeed bottling its Penfolds Max’s series in Shandong and has formed an exclusive partnership with state-owned conglomerate COFCO for China-bottled Penfolds Max’s series for the Chinese market ahead of Chinese New Year on February 1.

“In an exclusive partnership with COFCO, Penfolds is launching a limited release of Max’s wines in China in January 2022. These represent some of the most signature Penfolds styles from South Australia and have been bottled in Shandong Province, in accordance with local market regulations and Penfolds quality standards,” King says.

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This comes on heels of the group’s CEO Tim Ford‘s assurance that Penfolds will eventually make a Chinese Penfolds for China’s domestic market last month.

The shift to make Chinese Penfolds and bottling Penfolds in China signals that despite crippling anti-dumping tariffs of up to 218% imposed on Australian wineries, China is still too big to lose for wine giants like TWE.

Before China formally imposed the punitive tariffs in March last year, TWE was the biggest Australian wine exporter to China and was exporting 25% of its top-quality Penfolds range to the market, its most profitable export market ahead of America and Europe.

For the financial year of 2019 to 2020, its Asia division contributed 45% of its earnings.

Nonetheless, the group remains committed to Chinese market. “China remains a very important market to our growth ambitions. We continue to be committed to the China market and are looking at different ways to continue to bring high quality wines that consumers love,” King underscored in his reply.

In addition, King revealed that the company is also planning to launch their first Penfolds French Collection to the market in 2022 after its successful California collection launch.

“These have been possible because Penfolds, as a global wine icon, has been sourcing and crafting quality Penfolds wine from the best vineyards around the world for a long time.”

Long-term plan?

The collaboration with COFCO however is believed to be a one-time arrangement to sate pent-up consumer demand in China especially for the upcoming Chinese New Year on February 1. The traditional Chinese holiday is oftentimes the busiest season for wine sales.

According to a source who spoke to us on the condition of anonymity that the quality of the wines strictly meet the standards of Penfolds’ bottled wines in Australia.

It’s not clear about the volume of production of the China-bottled Penfolds Max’s series, or if the China-bottled wines will be enough to sate market demand, as the Penfolds Max’s series are among Penfolds’ most popular wines in the country.

Launched as a tribute to its founding winemaker Max Schubert in 2014, the wine range was first released in China in 2016 with COFCO Wine and Wine, the wine and spirits importing art of COFOC, and became an instant hit in the Chinese market for its approachability and price points.

In 2016, within 15 days after its official release, RMB 20 million (US$3.14 million) worth of Penfolds Max’s wines were sold. Within 30 days, its Penfolds Max’s Shiraz achieved RMB 30 million (US$4.7 million) in sales in 2017, and by the end of 2018, its key Penfolds Max’s SKUs and The Promise collection reached RMB 150 million (US$24 million)  in annual sales, according to the company.

It’s understood at this stage only Penfolds Max’s was bottled in China, not Penfolds Koonunga Hill or Rawson’s Retreat.