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Interview: Treasury Wine Estates CEO Michael Clarke

February 17, 2017

Earlier this week, Treasury Wine Estates posted a strong set of results for its fiscal first half ended in December, with net sales jumping 20% to just under $1 billion and EBITS surging nearly 60% to $173 million. TWE’s Americas region was a key contributor, with volume growing 13% to 7.9 million cases and revenue up 26% to $433 million. Following the results announcement, SND deputy managing editor Daniel Marsteller caught up with TWE chief executive Michael Clarke to discuss the group’s plans for the second half of its fiscal year and beyond.

SND: How has the revamp of TWE’s business progressed lately, particularly in the U.S.?

Clarke: We’re now seeing very good momentum across the business. North America and North Asia are the main areas for growth. We’ve already put quite a bit of work into resetting the portfolio in the U.S., separating our luxury brands from the commercial tier, and working with our distributor and retail partners on our route to market. We’ve also revamped the packaging and communications across the American portfolio so that we can take these brands and sell them not only in the U.S. but in other markets around the world.

SND: Have you identified which of the brands recently acquired from Diageo offer the most potential?

Clarke: First and foremost we did the Diageo deal to gain access to more luxury fruit and better margins. We’re very positive about Beaulieu Vineyard, Sterling, Hewitt, and even a brand like Acacia, which is not very big at the moment but one we see as having an opportunity for growth. Hewitt, for example, is on allocation; we wish we had more to sell. We’re already seeing the positive margin impact from resetting that portfolio. We won’t be discounting as much as the previous owner. We’re looking to continue to improve margins and grow the business.

SND: Would you consider more acquisitions?

Clarke: We’re always on the lookout. The first priority is to continue fixing what we have in terms of our American brands. The second would be to gain access to more luxury fruit or wine, so it’s possible we could layer on another deal.

SND: How is the outlook for Australian wine in the U.S. at this stage?

Clarke: I’m not as concerned with the Australian category as a whole as much as growing our Australian brands. With Penfolds, we’ve really only dabbled in the U.S. to this point. Looking into our 2018 fiscal year, we plan to invest behind Penfolds and grow that brand in the U.S. We’ll also be extending 19 Crimes with another wine, and we’ve selected other propositions from Australia—focusing on the luxury and masstige segments—that we think can work in the U.S. as well.

SND: Any comment on the ongoing dispute with Ste. Michelle over The Stag brand?

Clarke: We’ve made it very clear that The Stag from St. Hubert’s is an Australian wine and has no linkage whatsoever to the Stags Leap District in Napa Valley. Unfortunately this is a situation where a competitor is using their lawyers to try to stifle competition in the market.

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