Treasury Eyes Opportunities To Continue Building Luxury Range
October 16, 2023Treasury Wine Estates offered an update on its business ahead of its annual general meeting today, with CEO Tim Ford saying the company has “continued to see long-term premiumization trends across the global wine category, despite the tightening economic environment, with luxury wine going from strength to strength in our key markets globally.”
Ford noted that conditions in the company’s first quarter ended in September were consistent with its overall expectations, as luxury wines continued to show strength and premium brands were resilient in the market. “Our Americas business is well positioned for success and we look forward to a return to normalized luxury wine availability in Fiscal 25, supporting our confidence in our growth expectations,” he said. “We remain focused on opportunities to fill gaps in our luxury portfolio.”
The comments came after Treasury Americas posted net sales down 12% in its fiscal year through June, held back by “reduced availability of luxury wine from the lower yielding 2020 California vintage and reduced premium portfolio shipments.” Still, Ford highlighted that the division saw 14% EBITS growth for the year, with margins up strongly due to better portfolio mix and cost management.
Solid sales of higher-priced brands like Frank Family Vineyards—which depleted 127,000 cases in the U.S. in 2022, according to Impact Databank—continued Treasury Americas’ move toward the premium end during the fiscal year, and “double digit price increases were delivered within several brands including Stags’ Leap and Beaulieu Vineyard.” New Zealand brand Matua also continued to boost sales, after increasing 9% to 832,000 cases in 2022, according to Impact Databank.
Ford said today that Frank Family—acquired for $315 million in November 2021—performed ahead of expectations in its first full year with the company. “We look forward to increased availability of Chardonnay from late in Fiscal 24 to support the growth we expect for this brand,” he said.
Globally, Treasury said its earnings will be weighted to the second half this year, split approximately 45%/55% from the first half to the second, “reflecting the planned phasing of Penfolds shipments to retain flexibility given the potential for a future review of tariffs on Australian wine in China.” Longer-term the company is targeting sustainable top-line growth and high single-digit average earnings growth, with EBITS margin of 25%-plus.—Daniel Marsteller
Subscribe to Shanken News Daily’s Email Newsletter, delivered to your inbox each morning.Tagged : Frank Family, Matua, Treasury Wine Estates
