Shares in Penfolds maker Treasury Wine Estates have touched a four-month low amid reports it is facing an over-supply of its wine in China.
The company’s shares hit a low of $15.64 on Thursday after Fairfax Media reported that several distributors in China are sitting on large amounts of stock that is not selling.
The oversupply in China relates mainly to the Rawson’s Retreat and Wolf Blass labels, and some of the cheaper Berringer products, Fairfax reported.
The winemaker on Thursday warned against a reliance on feedback from some distributors in China, saying some underperforming customers may have been motivated to speak publicly by the company’s disciplined approach to selling a range of its wines.
But it admitted it was experiencing some delays in its stock being cleared by customs in China.
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“The company is seeking greater understanding of new and additional verification requirements which have been applied since April 2018, and seemingly appear to only apply to Australian Country of Origin wines, and to Australian exporters operating ‘warehouse models’,” Treasury Wine said on Thursday.
In 2013 Treasury Wine took a $155 million hit from a glut of stock in the United States, which resulted in then chief executive David Dearie leaving the company.
The company destroyed $35 million worth of aged and excess stock in the US and offered major discounts after admitting its overestimated the amount of wine needed to supply its US market.
On Thursday, Treasury Wine said it actively monitors shipments, depletions and stock levels of its retail and distributor partners.
Its shares recovered some ground in afternoon trade and closed at $16.90, a fall of $1.11, or 6.2 per cent.
