It was another disappointing day of trade for the Treasury Wine Estates Ltd (ASX: TWE) share price.
The wine company's shares continued their poor run with another decline of 4% on Tuesday. This brought their six-month decline to a sizeable 20%.
Why are Treasury Wine Estates' shares sinking lower?
A number of popular growth shares in the consumer staples industry such as Treasury Wine Estates, Bellamy's Australia Ltd (ASX: BAL), and Freedom Foods Group Ltd (ASX: FNP) have come under pressure today.
While part of this could be due to concerns over weak economic data in the key China market, I suspect the majority of the selling has been caused by the market volatility.
As these three shares trade at a premium to the market average, they are more likely to be sold off in turbulent times.
What else has driven its decline?
In addition to this, the global wine company's shares have come under fire in recent months due to concerns over the oversupply of its wine in the China market and the growth of its U.S. business.
A note out of Citi, for example, revealed that its analysts are concerned that the market may be too optimistic on just how quickly its Americas business can improve its earnings.
Its research pointed to declines in the sales of its large volume brands including Beringer, BV Coastal and Lindemans in the Americas market and led to Citi slapping a sell rating and $14.50 price target on the Treasury Wine Estates' shares.
Should you buy the dip?
While I think that Citi makes a fair point, with its shares now trading below its price target, I think it could be a good time to consider a position in the company.
However, as its shares do still trade at a premium to the market average, I suspect that they may trade sideways at best if this market volatility persists. In light of this, I would recommend investors only pick up shares if they are prepared to be patient and hold onto them for the long term.
