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Treasury Wine Estates Profits Jump 18% In Fiscal Year

August 16, 2018

Treasury Wine Estates (TWE) saw profit continue to grow in its fiscal year ended in June, as premiumization in the U.S. and strong shipment growth in Asia and Australia drove EBITS up 18% at constant currency to A$530.2 million ($385m). Treasury’s net revenues were up 1.7% at constant currency to A$2.4 billion ($1.7b), despite the recent overhaul of the company’s U.S. route-to-market, which affected shipments in its fiscal second half.

Treasury’s Americas region posted shipments down 13% to 13.7 million cases and revenues down 9.4% to A$962 million ($699m) for the year, but despite the route-to-market changes the region’s EBITS were up 1.7% at constant currency to A$193 million ($140m). U.S. profits were driven higher by premiumization but partially offset by a one-time $25 million impact from the route-to-market transition.

The company’s net sales revenue per-case in the Americas region was up 4.5% to A$70 ($51) in the fiscal year, led by an improved product mix and higher pricing in the luxury segment. TWE noted that its Americas depletions outpaced shipments by 400,000 cases, with its luxury and “masstige” ($10-$20) wines combining for 6% depletions growth.

In the U.S., TWE said it’s “continuing to invest in self-distributing 25% of its business in large, direct states and transitioned 15% of its business to new, growth-oriented distributor partners” during the second half of the fiscal year. Among the changes recently implemented were a shift to a partial self-distribution model in California and Washington and a hybrid model in Florida, where TWE is now directly managing relationships with its large retail partners in collaboration with Breakthru Beverage. Prior to the changes, Southern Glazer’s had been TWE’s distributor partner across the affected markets. While Southern Glazer’s lost TWE’s brands in key states like California, Florida and Illinois, it remains linked with TWE in Texas, among other markets.

Globally, TWE saw double-digit profit growth across each of its other operating regions in the 12 months through June. EBITS were up 37% to A$205 million ($149m) in Asia (led by volume gains for Australian, U.S., and French wines), up 21% to A$49.5 million ($36m) in Europe, and up 23% to A$136.1 million ($99m) in Australia and New Zealand.

Yesterday, SND exclusively reported that Treasury will launch a new female-targeted global wine brand, EmBrazen, beginning on August 26.—Daniel Marsteller

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