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Australia's largest listed wine company Treasury Wine Estates (ASX: TWE) has acquired 75 per cent of Ningxia Stone & Moon Winery for RMB130 million ($27.5 million) as part of plans to grow its luxury wine portfolio in the Chinese market.
The deal, which includes an option to purchase the remaining 25 per cent ownership after five years, includes 43 hectares of vineyards and a modern winery with capacity for future expansion and a cellar door.
The acquisition price is far from the $1.6 billion paid for DAOU Vineyards in California last year but the vineyard landholdings are about a quarter of its size.
The Chinese company, trading as Stone & Moon and operating in the highly-regarded wine production region of Ningxia in the country's northwest, will complement third-party sourcing arrangements for the Penfolds’ China country of origin portfolio.
Over time the Australian group plans to develop the site to become the "local brand home" in China for Penfolds, building on its strength as one of the leading wine brands in the market.
"Today’s announcement is a significant step forward for TWE, and Penfolds, in China," says Treasury Wine Estates chief executive officer Tim Ford.
"Through this acquisition, we will further strengthen our commitment to, and investment in, the China wine industry, where Penfolds continues to be a highly admired and sought after brand.
"The successful evolution of Penfolds to becoming a multi-country of origin brand has been a significant execution highlight in recent years, with the China sourced portfolio having resonated particularly strongly with Chinese consumers, and we look forward to continuing that momentum through this important long-term investment."
The news follows the announcement in August that the group would be writing down the value of several prominent brands - including Wolf Blass, Lindeman's and Yellowglen - to the tune of hundreds of millions of dollars, and selling them off.
This decision was made so that Treasury Wine could better focus on its highly-performing premium portfolio that includes Penfolds and other brands such as Wynn’s and Pepperjack.
As part of a broader shift back to the Chinese market following the removal of tariffs this year, earlier this month the group announced Chinese resident and experienced e-commerce executive Judy Liu would join its board as a non-executive director on 1 January 2025.
Liu co-founded CuriosityChina, a market leader in digital marketing and marketing technology solutions for luxury brands. In 2018 her company was acquired by global e-commerce giant FarFetch and she was made president of its Asia Pacific operations - a role she held until June this year.
"I am delighted to welcome Judy to the board. Judy’s extensive experience in e-commerce and growing luxury businesses, and unparalleled understanding of the Chinese luxury consumer, will be invaluable to the board and the company," Treasury Wine Estates chairman John Mullen said at the time.
TWE shares are up 4.26 per cent at $11.98 at the time of publication, and have risen 12 per cent in the year to date.
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