Treasury profits from premium shift
Treasury Wine Estates’ first results since its demerger from Fosters show a 40% net profit increase to AU$89.9 million as the company pursues its strategy to withdraw from the heavy discounting wine sector.
The company, whose brands include Beringer, Penfolds, Wolf Blass, Lindeman’s and Rosemount, split from Fosters in May 2011 as the brewer struggled to operate a profitable wine business.
Total volumes across Europe, Middle East and Africa were down 18.7% as the company pursued its strategy to “exit unprofitable sales”, especially in the UK and Ireland.
By contrast with EMEA, chief executive David Dearie hailed Asia as “an exciting growth engine for our business”. Now representing 20% of TWE’s global business, Asia generated a 40.6% rise in earnings last year to AU$41.2m.
Volumes in China and Hong Kong grew by 31%, driven by an increased allocation of TWE’s luxury and “masstige” portfolio. However, Dearie confirmed there were “about seven or eight really key countries for us in Asia,” pointing to strong growth in Japan and Singapore.
In the US, TWE’s earning fell by 11.6% as the company focused on volume depletions and brand building. Earlier this week TWE announced the internal appointment of John Grant as managing director for its Beringer Brand Business Unit, which includes Beringer, Chateau St Jean, Etude, Stag’s Leap and Castello di Gabbiano.
Grant’s role gives him responsibility for setting the global strategy for the Beringer portfolio, with a focus in line with the wider TWE emphasis on driving “profitable growth”.
Commenting on the appointment, Dearie said: “I have no doubt that John’s proven leadership experience, strong commercial acumen and creative drive will help deliver new growth opportunities for Beringer both in its home market of the Americas as well as globally.”
Looking to the future outlook for TWE as a whole, Dearie maintained that the “long term fundamentals of the global wine industry remain positive,” but warned that growth would slow in 2013 as the company focuses on building an inventory of premium wines.
However, he continued: “Our positive outlook for fiscal 2014 is underpinned by the exceptional wines crafted from the recent 2012 Australian vintage, with almost ideal growing conditions complemented by our viticulturists, wine makers and supply team and the result is a meaningful increase in quality wines.”