Breville Group clears its tariff overhang as its US supply chain shift nears completion

A prolonged period of US tariff disruption and manufacturing relocation weighed on Breville Group through 2025 and 2026, but with the supply chain shift now largely complete, fund managers are split over whether the stock's premium coffee-appliance growth story is fully priced in.

17 Jul 2026 · 5 min read

Fund managers covering Breville Group Ltd (ASX: BRG) have spent the past year navigating a genuinely difficult period for the premium coffee and kitchen appliance maker, as US tariff policy forced a costly manufacturing relocation even as underlying demand for its products held up. Antares Capital captured the mood in October 2025, saying it was increasingly concerned that while the topline of coffee maker sales would hold up, the impact of tariffs on cost of goods sold would not be mitigated as quickly as anticipated, preferring to sit on the sidelines.

New entrants bet on the long-term structural story

Even as some managers stayed cautious, others used the tariff-driven weakness to build new positions. Sterling Managed Investments and Clime Investment Management both initiated positions in October 2025, attracted to Breville's capital-light business model, dominant position in premium coffee appliances, and consistent track record of double-digit revenue growth, while acknowledging FY26 would be a transition year due to US tariffs and manufacturing changes. Both funds argued these pressures were temporary, with the long-term outlook supported by rising global demand for at-home specialty coffee, continued product innovation, and international expansion, backed by a strong balance sheet.

While FY26 will be a transition year due to US tariffs and manufacturing changes, we believe these pressures are temporary. The long-term outlook remains strong, supported by a structural growth market of rising global demand for at-home specialty coffee.

Sterling Managed Investments, Monthly Report, October 2025

A major shareholder exits amid redemption pressure

The stock's registry saw a dramatic shift in early 2026. One media report tracked long-time major shareholder Bennelong Australian Equity Partners reducing its Breville holding from 8.5 million shares to just 1.9 million, worth an estimated $223.6 million, after building the position since 2018 and peaking at a 12.5% stake in 2022. The reporting noted Breville's half-year results, released the same week, had actually beaten fears that tariff-related headwinds would slash earnings, with revenue up a record 10.1% and earnings and net profit flat, suggesting the sell-down likely reflected fund redemption pressure rather than any change in view on Breville's outlook.

The supply chain transition nears completion

By mid-2026, the operational picture had clarified substantially. DS Capital reported the company had significantly de-risked its powerhouse US business, with 80% of US-bound gross profit now generated from facilities outside the Chinese tariff zone, even as gross margins faced compression during the year from higher US tariffs and the structural costs of transitioning to alternative manufacturing hubs. The fund noted growth across newer direct geographies including South Korea, China and Mexico remained robust, albeit off low bases, while the company continued to capitalise on premiumisation trends in the global coffee category.

Managers split on whether the reset is fully priced in

By July 2026, with the tariff transition largely behind the company, fund managers arrived at genuinely different conclusions on valuation. Pendal Group rated the stock a hold at 29 times earnings, acknowledging Breville is executing well and gaining share in an attractive structural growth category, but arguing growth had been subdued through 2026 and the multiple already reflected an expected return to low double-digit growth in FY27. Wilson Asset Management took the opposite view, calling it a buy on the basis that FY27 offers a much cleaner base after the messy tariff period, with the company's affluent US consumer exposure and strong in-store execution within Best Buy positioning it for double-digit-plus earnings growth.

You're getting rid of a lot of what was the messy period for Breville in terms of tariffs and whatnot, you're entering FY27 with a much cleaner base with what we believe will be double digit plus earnings growth.

Wilson Asset Management, Article, July 2026

What managers are watching next

With the US manufacturing relocation largely complete and 80% of US-bound gross profit now outside the tariff zone, the next catalysts fund managers are tracking are whether FY27 delivers the low double-digit growth the market has priced in, continued momentum in newer geographies such as South Korea and Mexico, and whether the Americas region, already contributing around 50% of revenue and growing at a 15% five-year compound annual rate, can sustain that pace as the tariff disruption fully clears.