China sales slump weighs on Penfolds owner Treasury Wine Estates

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Penfolds and Wolf Blass owner Treasury Wine Estates has posted its first annual loss, amid a slump in sales in China.

Figures from its latest financial statement released this week show that in the year through to June, the company made a net loss of A$100.9m. This compares to a profit of A$47.2m for the same period the year before.

Michael Clarke, the company's chief executive, described 2014 as ‘a challenging year’, blaming a significant slowdown in sales China, as well as an oversupply in the US.

The loss comes as the company is considering two rival offers to take over its business. One proposal is from the US-based KKR and Rhone Capital, the other proposal is ‘from a global private equity investor that has requested anonymity’, a TSE spokesperson told DecanterChina.com.

In addition to reporting earlier this year that wine sales in China had been curtailed by government austerity measures, the company is also fighting a trademark battle in China for the Penfolds brand against a trademark squatter, as previously reported by DecanterChina.com.

The dispute has caused the hotel group InterContinental to withdraw Penfolds from wine lists at their 214 China-based hotels, according to the Australian Financial Review.

However, Treasury said that it ‘does not believe the Penfolds brand will be adversely affected’ by the dispute, and expects its case regarding the ownership of the trademark ‘to be successful’, said the spokesperson.

According to the TWE website, the company has 11,000 hectares of vineyards, and sales of 32 million cases of wine annually.

It employs more than 3,500 winemakers, viticulturists, sales, distribution and support staff across 16 countries.

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