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Treasury Bets On China’s Rising Wine Market

March 22, 2013

Treasury Wine Estates CEO David Dearie said wine volume in China will rise to about 500 million cases in 10 years, from the current level of 150 million cases. Dearie, traveling in China with Treasury’s board, told Bloomberg News that such growth will put China ahead of the U.S as the world’s largest wine market, which he estimates will be at around 450 million cases in a decade. Dearie said Treasury is currently seeking to expand its presence in China from nearly 16 cities at present to around 60 cities within five years.

Treasury’s focus in China is premium mass-market wines, targeting consumers age 20-45 with annual disposable income of 150,000-200,000 yuan ($24,100-$32,100). Dearie added that Treasury’s portfolio hasn’t been hurt by the frugality drive of President Xi Jinping, even though about 40% of its sales are for business occasions.

David Errington, an analyst at Bank of America Corp.’s Merrill Lynch unit, recently estimated in a note to clients that Asia will contribute nearly A$200 million ($208m) to Treasury’s EBIT by 2016, according to the report.

 

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