Luxury Growth, Price Increases Boost Treasury Despite U.S. Sales Slip

Treasury Wine Estates saw net sales slip 2.2% to A$2.4 billion ($1.56b) in its fiscal year through June, as growth at the luxury end couldn’t offset declines in its Americas and commercial portfolios. Still, EBITS increased 11% to A$584 million ($379m), boosted by better margins owing to the company’s tilt toward the premium end of the market. The group’s Penfolds division was a key contributor, with sales and EBITS both up 14%, to A$820 million ($532m) and A$365 million ($237m), respectively.

Treasury Americas likewise saw EBITS increase, by 14% to A$204 million ($132m), as net sales revenue per-case rose 18% to A$150 ($97). Those numbers were lifted some by currency fluctuations, however, as net sales declined 12% to A$821 million ($533m) on a 25% volume decrease to 5.5 million 9-liter cases. The company noted that, excluding new products, “depletions exceeded shipments by approximately 0.6 million cases with increased focus on inventory management by distributors and retailers.”

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 period, and the company noted that “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.

Treasury Americas’ 19 Crimes brand saw shipments decline for the year, but the company said “the total 19 Crimes franchise remained in growth across scan channels during F23, up 1%, outperforming the premium segment, which declined slightly.” 19 Crimes Martha’s Chard and Snoop Cali Gold saw strong depletions in the U.S. in 2022, reaching 187,000 cases and 65,000 cases respectively, according to Impact Databank. Treasury added that the 19 Crimes Classics tier will see the launch of a new brand platform this fall, along with “continued innovation for 19 Crimes and Matua and the reopening of the Sterling Winery.” Meanwhile, the new product pipeline includes Tapestry, a California red blend in the $20-$25 price point, set to be focused toward the on-premise.

Speaking to the overall results, Treasury Wine Estates CEO Tim Ford said, “The Penfolds result was the standout, with strong top-line luxury growth reflecting the unparalleled strength of this exceptional brand and outstanding execution by the team. Treasury Americas luxury portfolio execution was a highlight, with price increases and growth in distribution achieved despite significant volume availability constraints, setting a strong platform for future growth.”

Looking ahead, Treasury noted that while overall demand for luxury wine remains strong, “Luxury portfolio growth for Treasury Americas will be modest in F24 through the release of the 2021 Californian vintage, laying the platform for a step-up in growth from F25 when the higher volume 2022 vintage will be released.” In the premium segment, demand is expected to remain consistent with current conditions, with the company pledging “continued investment and innovation across key priority brands.”—Daniel Marsteller

Tagged : 19 Crimes, Matua, Penfolds, Treasury Wine Estates

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