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Treasury Wine Estates Posts 12% Sales Growth, Boosts Capacity In France, Australia

August 15, 2019

Treasury Wine Estates saw sales climb 12% to A$2.8 billion ($1.9b) in its fiscal year through June on a constant currency basis, as the company’s $10 and above business increased by 27%. Wines retailing at $10 and up now account for nearly 70% of net sales for Treasury, which has undertaken an aggressive premiumization campaign in recent years. Those gains drove a 21.5% increase in EBITS to A$662.7 million ($449m).

In Treasury’s Americas region, sales were up 9.4% to A$1.1 billion ($746m), with revenue per-case rising 6.5% and EBITS increasing 1.8% to A$218.7 million ($148m). The company says its recent route-to-market changes in the U.S. are now “successfully embedded” and began to deliver improved margins in the second half of the fiscal year.

From a brand perspective, Treasury saw premium and above labels like Stags’ Leap, Beringer Luxury, BV, Penfolds, 19 Crimes, Matua, The Stag, and Beringer Brothers provide momentum in the U.S., while its commercial segment continued to decline “driven by increasing retailer focus on private label and aggressive competitor discounting.” In particular, 19 Crimes has been a star performer, increasing 47% to 1.6 million cases in the U.S. last year, according to Impact Databank. Matua, meanwhile, jumped 22% to 525,000 cases. Overall, TWE noted that its Americas shipments were lower than its depletions during the fiscal year.

Elsewhere across Treasury’s global business, the company’s Asia unit enjoyed robust growth, with sales up 36% to A$749 million ($508m) and EBITS leaping 49% to A$294 million ($199m), led by its Australian and French portfolios, as its American brands have been hampered by trade tensions between the U.S. and China. Sales in Australia/New Zealand were roughly flat at A$602 million ($408m) and Europe was up 4.4% to A$346 million ($235m).

Meanwhile, TWE revealed that it’s making significant investments in capacity in Australia and France. Down under, the group is pouring A$150-A$180 million ($102m-$122m) into its Bilyara winery in South Australia to bolster supply of its luxury labels. In France, TWE noted that it has recently acquired undisclosed production and vineyard assets in the Bordeaux region, which will allow it to “expand its French country-of-origin portfolio, centered on the Penfolds, Beaulieu Vineyard, and Maison de Grande Esprit brands.”—Daniel Marsteller

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