Oct 31, 2023 - Economy

Australia's Treasury Wine paying up to $1 billion for California vineyard

Illustration of a one-dollar bill with George Washington holding a glass of red wine. — Illustration: Maura Losch/Axios

Treasury Wine Estates, a listed Australian wine producer whose brands include Penfolds, agreed to buy Paso Robles, Calif.-based Daou Vineyards for upwards of $1 billion.

Why it matters: This reflects Treasury's belief that U.S. wine consumers are moving upmarket, where producer margins are higher, and away from discount bottles.

It's also a doubling-down on a country in which Treasury has underperformed, including after its 2021 acquisition of Napa Valley's Frank Family Vineyards for $315 million.

Details: The deal includes $900 million upfront and up to $100 million in future earn-outs.

The bottom line: This looks like a sensible de-risking in the context of a world where Australian wine exports live and die at the whim of the Chinese government. The Chinese market might soon reopen for Penfolds, but it makes sense to own producers who are much less exposed to it."

Add Axios on Google

Australia's Treasury Wine paying up to $1 billion for California vineyard

What to read next