Treasury Wine Estates' (ASX:TWE) key premium red grape growing regions showed volume declines in Wine Australia's 2026 national vintage report, Jefferies said in a Wednesday note.

While the vintage report showed both the red and white grape crush contracting, white grapes boosted their share of overall volume significantly amid a shift in consumer preferences toward white wines.

This dynamic isn't positive for Treasury Wine Estates as the company's brand equity is much stronger in full-bodied red wines, which consumers appear to be moving away from in most markets, the equity research firm said.

White varieties represented 53% of total volume crushed, their highest share on record and marking only the second time white grapes accounted for the majority over the last 12 years, the investment firm said.

Meanwhile, average grape prices declined 5.6% to hit the lowest level since 2017 despite a significant reduction in supply, as the 2026 grape crush fell 19% year over year. While this could prove helpful for Treasury Wine Estates' cost of goods sold, the decline reflects continued softness in global wine demand, Jefferies said.

The investment firm maintained a hold rating on the company with a price target of AU$5.

Treasury Wine Estates shares gained over 1% in recent Thursday trade.