What happened
On September 29, premium Australian wine brand Penfolds launched its One By Penfolds 奔富一号 series in the Chinese market as a prelude to the global launch in mid-2023. The series continues Penfolds’ multi country of origin winemaking approach by featuring wine sourced and made in California, France, and for the first time, China. Specifically, the new Chinese wine uses grapes from the northwestern Ningxia region, which is on a similar latitude to Bordeaux, and will be available exclusively in China.
Renowned artist Ori Toor was invited to create distinctive packaging designs and aesthetics for each wine. As part of its local communities support program, Penfolds also announced the creation of the “One By Penfolds Fund” and an academic exchange program in partnership with the China Agricultural University at the launch. The fund and the program will support the university in nurturing winemaking talents through scholarships and promoting viticulture education in the wine-producing regions of Ningxia, Yunnan, and Hebei.
The Jing Take
The latest launch by Penfolds reflects its commitment to the important Chinese wine market. According to Chinese industry consulting firm Askci, the size of China’s wine market was $12 billion (86.5 billion RMB) in 2018 and $10.9 billion (78.1 billion RMB) in 2019. The COVID-19 pandemic sharply reduced wine consumption in China, but the market is rebounding, reaching about $7.1 billion (51.1 billion RMB) in 2021, a 2.5 percent year-on-year growth. It has an expected size of $8.2 billion (58.7 billion RMB) in 2022.
However, China’s strained relationship with Australia complicates Penfolds’ expansion in the market. The 2022 annual report of Treasury Wine Estates, the owner of Penfolds, lists “the effective closure of the mainland China market to Australian wine products” as a major challenge. Therefore, the importance of the new Ningxia wine offering transcends beyond introducing a new product: it represents Penfolds’ ingenious strategy to combine Australian wine heritage with Chinese geographical IP that can appeal to more Chinese wine lovers.
Penfolds’ corresponding corporate social responsibility initiatives also demonstrate that it has an “in China, for China” attitude that can win the approval of increasingly patriotic Chinese consumers. “As a global brand, Penfolds continues to expand its influence in China’s wine market and brings in new solutions and channels for product innovation, as well as fostering international exchanges in winemaking and retail,” remarked Wang Qi, Executive Director of the China Alcoholic Drinks Association. “Going forward, support from global wine producers, including Penfolds, will be necessary for China’s wine sector to have high-quality development and greater influence.”
In addition, Penfolds seeks to attract digital-savvy young Chinese consumers by making the series available through Penfolds’ flagship stores on Tmall, JD.com, and the short-video platform Douyin. The art design from Ori Toor adds trendy cultural symbols to the offering, further breaking down the stereotype that wine is only for formal occasions and mainly consumed by elder generations. With long-term support pledged to China’s wine industry, Penfolds is poised to become a leading international label when it comes to capturing the hearts and minds of young Chinese wine enthusiasts.
The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.