Treasury Americas Looks To Second Half After H1 Decline
February 15, 2024Treasury Wine Estates saw sales in its Americas unit decline 6.5% at constant currency to A$448 million ($291m) in the company’s fiscal first half through December, as volume dipped 7% to 2.8 million 9-liter cases. EBITS in the Americas division fell 23% at constant currency to A$93 million ($60m).
The U.S. decline was blamed on lower shipments of 19 Crimes offerings like Cali Gold and Cali Blanc, while the luxury portfolio grew 3.2%, led by double-digit gains for Frank Family Vineyards, which Treasury sees as well-positioned for further growth in the years ahead. Treasury said its relaunch of the 19 Crimes Classics portfolio is “showing positive signs” as it rolls out to market, backed by a marketing campaign and retail activation.
The company noted that overall “premiumization trends are continuing in the U.S. wine category with premium price points above $11 stable and above $20 in growth.” That dynamic underpinned Treasury’s move to pay up to $1 billion last year for Paso Robles-based Daou, which joined a luxury stable that also includes Napa Valley wineries Stags’ Leap, Beaulieu Vineyard, Frank Family, and Beringer.
Looking ahead, Treasury is expecting low double-digit sales growth for Daou, led by the higher-volume Discovery and Journey tiers, as well as the launch of a new Napa-appellated brand tier and accelerated growth at the ultra-luxury level. Daou had EBITS of US$64 million in calendar 2023, in line with expectations. With the contribution of Daou, TWE is aiming for the luxury tier to account for about 70% of U.S. earnings from fiscal 2025.
Globally, Treasury’s first half net sales were down 2% at constant currency to A$1.3 billion ($844m), as EBITS slipped 10% to A$290 million ($188m). Its Penfolds division contributed growth, rising 8% in sales terms and 4% in EBITS, while the Treasury Premium Brands unit declined.
“Penfolds continues to perform and strengthen, whilst Treasury Americas has made significant progress in reshaping its portfolio focus with continued growth of its luxury brands now supported by the acquisition of Daou in December,” said CEO Tim Ford. “The business is on track to deliver mid-high single digit earnings growth in F24 and we remain confident (in) our premiumization strategy.” —Daniel Marsteller
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