Treasury Sees U.S. Picture Improve, Boosted By Retail Channel
February 17, 2021Treasury Wine Estates posted net sales down 5.9% to A$1.4 billion ($1.1b) for its fiscal first half ended in December, with EBITS slipping 22% to A$284 million ($220m). The company’s results were weighed down by pandemic restrictions cutting into occasions for higher-margin luxury wines and trade tensions between Australia and China, which has imposed high tariffs on Australian wines in recent months.
Treasury Americas saw sales slip 7.2% to A$535 million ($414m) year-on-year, as EBITS declined 2.7% to A$83 million ($64m), but the company noted that strong growth in retail and e-commerce channels allowed the Americas business to increase sales 17% and EBITS 70% compared with the previous six-month period. Treasury’s premium focus brands rose 31% at retail in the Americas year-on-year, driven by 19 Crimes, St Huberts the Stag, Beringer Brothers, Matua, Stags’ Leap, and Beaulieu Vineyard. According to Impact Databank, 19 Crimes jumped 34% to 2.2 million cases in the U.S. in calendar 2020, while Matua advanced 18% to 730,000 cases.
19 Crimes has bolstered its momentum with the launch of Cali Red ($12 a 750-ml.), a partnership with rapper Snoop Dogg, and will introduce a Cali Rosé extension in the first half of this year. Meanwhile, flagship brand Penfolds has just unveiled a lineup of four California-based wines from vineyard holdings in Napa, Sonoma, and Paso Robles, with prices ranging from $50 to $700, which Treasury called “an important milestone for the brand in the U.S.” As it continues to sharpen its focus on premium brands, TWE noted that it will continue to “explore the divestment and exit of other non-priority brands, operating assets and leases” in the U.S., seeking cost savings of A$300 million ($232m).
Treasury’s moves to raise Penfolds’ profile in the U.S. have taken on new urgency lately, as the company’s China business comes under pressure due to massive tariffs on the Australian category. While that situation contributed to an 18% revenue decline to A$333 million ($258m) in its Asia unit in the six months through December, TWE now says it’s “becoming increasingly confident around the opportunity for reallocation of the Penfolds Bins and Icon range to other global markets.”
Along with revealing its fiscal first half results, TWE announced that it’s realigning its business into three separate operating units—Penfolds, Treasury Premium Brands, and Treasury Americas—beginning in July. TWE had previously considered demerging the higher-margin Penfolds business entirely, but more recently put those plans on hold. “While we expect disruptions to continue across a number of our sales channels through the remainder of fiscal 2021, we are well placed to further our recovery once conditions improve in key channels for luxury wine,” said Treasury CEO Tim Ford.—Daniel Marsteller
| Treasury Wine Estates’ Top Five Brands In The U.S. (millions of 9-liter case depletions) | |||||
| Rank | Brand | Origin | 2019 | 2020 | Percent Change1 |
|---|---|---|---|---|---|
| 1 | Beringer | California | 4.73 | 4.19 | -11.3% |
| 2 | 19 Crimes | Australia | 1.63 | 2.18 | 33.8% |
| 3 | Lindemans | Australia | 1.12 | 0.97 | -13.3% |
| 4 | Sterling2 | California | 0.84 | 0.76 | -10.0% |
| 5 | Matua | New Zealand | 0.62 | 0.73 | 18.5% |
| Total Top Five3 | 8.94 | 8.83 | -1.1% | ||
| Other Brands | 2.70 | 1.99 | -26.5% | ||
| Total TWEA | 11.64 | 10.82 | -7.0% | ||
| 1 Based on unrounded data 2 Includes Sterling Vintners Collection and Sterling Vineyards 3 Addition of columns may not agree do to rounding Source: IMPACT DATABANK © 2021 |
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Tagged : 19 Crimes, Penfolds, Treasury Wine Estates
