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Treasury’s U.S. Depletions Slip 2% For Full Year, But Trend Improving

August 17, 2012

In its first full fiscal year as a standalone wine company, Treasury Wine Estates said its U.S. depletions declined 2% in the 12 months through June 30, but asserted that trends are pointing in the right direction, with depletions rising 2.3% over its fiscal second half.

Among Treasury’s key brands, Beringer and Lindemans have shown positive momentum lately after struggling in recent years. Beringer, which does 95% of its sales in North America and was down 4.8% to 6.3 million cases in the U.S. in calendar 2011, saw global volumes improve slightly in the 12 months through June. But its second-half depletions rose 5.8%, and fourth quarter depletions, up 7.2%, were even stronger (the rollout of Beringer Moscato, Pink Moscato and Red Moscato in recent months has helped boost sales). Lindemans, another brand that’s slid markedly in recent years (it was down 28% to 1.7 million cases in the U.S. from 2009-2011), enjoyed U.S. depletions growth of 7% for the full fiscal year. Smaller brands Colores del Sol and Cellar No. 8 have also made positive contributions in the U.S. recently, rising 17% to 75,000 cases and 14% to 245,000 cases in calendar 2011 respectively.

Treasury CEO David Dearie said the company has “made good progress in stabilizing volumes and building sales momentum” in the Americas, its largest region. “To drive this momentum we’ve switched brand building activities and reallocated funds from above the line to focus on winning at the point of purchase,” he added.

But Dearie cautioned that tight wine supplies in Australia and the U.S., especially at the premium end of the portfolio, could weigh down results in the year ahead, as could planned inventory reductions by the group’s U.S. distributors. “We have less premium wines available to meet consumer demand and the quality wines we have crafted are at a higher cost,” he said.

With volumes stable in the U.S., Treasury continues to tilt more resources into its Asian business, which has seen solid growth in China, Japan, Singapore and other countries and now contributes about one-fifth of the company’s earnings. For the full year, Treasury’s global depletions declined 4.4% to 31.8 million cases, with revenue down 2.9% to A$1.64 billion ($1.7b) at constant currency. The company said that excluding the U.K., where it “withdrew from unprofitable sales,” volume for the year rose slightly across its global business.

 

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