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Treasury Wine Estates’ Sales Jump 20% In Fiscal First Half

February 14, 2017

Treasury Wine Estates (TWE) is toasting a strong start to its fiscal year, with net revenue leaping by 20% to A$1.3 billion ($993m) in the six months through December, representing the company’s fiscal first half. TWE’s volume vaulted by 19% to nearly 19 million cases during the period, while EBITS grew 59% to A$227 million ($173m).

TWE’s Americas region was a key contributor to growth, with the unit posting volume up 13% to 7.9 million cases and revenue up 26% to A$566 million ($433m). The company’s U.S. results benefited from the 2015 acquisition of the former Diageo wine business, with that impact partially offset by the divestiture of a slew of non-priority commercial wines last summer. TWE says the reset of its Americas business toward the higher end of the market is on track, illustrated by its per-case revenue growth of 12% in the first half.

Among the brands leading the way for TWE in the U.S. lately are Australia’s 19 Crimes and New Zealand’s Matua. 19 Crimes jumped 66% to 435,000 cases in the U.S. in calendar 2016, according to Impact Databank, while Matua advanced by 12% to 350,000 cases. TWE has boosted its advertising and promotional spend to start the year, “front-loading” a 30% increase in the first half as part of its effort to refresh and reset its U.S. portfolio for the long term.

In an interview with SND, TWE chief executive Michael Clarke said the business is showing “very good momentum. North America and North Asia represent the main areas for growth.” He added that the company is currently focused on “fixing what we have” within its U.S. portfolio, and noted that substantial work has already been done to reposition the brands gained from Diageo, such as Beaulieu, Sterling, Hewitt, Acacia and others. “We’re focused on improving margins and growing that business,” Clarke said.

In order to further accelerate growth in the U.S., Clarke will begin splitting his time between TWE’s Melbourne and Napa, California offices at least through the end of this year. “The U.S. is the largest contributor to TWE’s profit while also presenting the largest opportunity for both absolute profit growth and margin expansion,” noted TWE chairman Paul Rayner in announcing the move. Concurrently, TWE has named Gunther Burghardt CFO, replacing Noel Meehan. Burghardt, who was previously CFO of Treasury Americas, will continue to be based in Napa. —Daniel Marsteller

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