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Dearie confident in global wine growth

Treasury Wine Estates (TWE) remains confident that increasing demand for wine in Asia and Australasia will continue to offset declines in other markets.

TWE, which was reporting its first annual results since demerging from the brewer Foster’s, said total sales volumes fell to 33.2 million nine-litre cases in the year to 30 June, from 35.6m cases the year before – a drop of 6.6%. It reported a net profit of AU$64.1m.

The company is the largest supplier of bottled wine in Australia and the third largest supplier in the US. It produces wine in Australia, New Zealand, the US. and Italy, with its premium and commercial brands including Penfolds, Wolf Blass, Rosemount and Beringer.

Sales volumes in the Americas fell by 11% to 15.9m cases from 17.9m cases, and were down in Europe, the Middle East and Africa (EMEA) by 3.8% to 8.3m from 8.9m cases, nullifying gains in Australia, New Zealand and Asia.

David Dearie, TWE chief executive officer, said: “Demand for wine globally continues to increase in most of our key markets.

“In Australia and New Zealand, our result reflects further significant improvements in the way we do business, from sharper focus on our brands, continued supply improvements, better sales and marketing capability, and improved partnering.

“A softer second half performance in Americas took the shine off a very solid first half. Overall, Americas EBITS was up 8.2% on a constant currency basis, but down 14.2% on a reported basis.

“We saw continued growth in our luxury and emerging premium brand portfolios and, on a constant currency basis, in net sales revenue per case. However, this was offset by steeper than expected volume declines in our commercial portfolio.

“We’re taking steps to address this and a key priority for 2012 is to stabilise the volume of our commercial brands.”

Like all other wine companies, TWE is looking to Asia to drive growth.

Dearie said: “We are pleased with the strong growth from Asia, with EBITS up 18.6%. We are seeing increasing demand for many brands in our portfolio throughout Asia and consider Asia a critical region and will continue to increase investment to fuel growth.”

Dearie also stated his belief that growth can also be driven through concentrating focus on the US and Australian markets.

Along with the results announcement, the company has also unveiled its new global structure which, according to Dearie, is designed to help TWE become the “world’s most successful and celebrated wine company”.

“Today we’ve announced a new global structure to ensure that we think and behave as a global business; one that will allow us to allocate our resources to growth opportunities that optimises returns for TWE as a whole,” Dearie said.

“This structure recognises equally the importance of our brands, supply, and the regions in which we operate.

“This change in emphasis enables our brand directors to pro-actively lead their global positioning.

“It also allows us to align our winery operations and winemaking into one global group dedicated to producing superb wines, as efficiently and cost effectively as possible.

“This change also ensures that our sales teams are able to focus 100% of their time, energy and resources on distributor and retail management, the shopper, trade marketing and of course selling.”

Click here to read a full interview with David Dearie.

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