Treasury Looks To Refocus U.S. Business As Covid-19, Private Labels Cut Into Full-Year Sales

Treasury Wine Estates posted net sales down 6% to A$2.6 billion ($1.9b) for its fiscal year ended in June, as headwinds from Covid-19 and challenging conditions in the U.S. continued to weigh on the company’s business. EBITS were off 22% to A$534 million ($382m).

Treasury’s Americas region saw sales slip 6% to A$1.1 billion (A$790m), with EBITS down 37% to A$147 million ($105m). Accelerating private label activity in the U.S. continues to present a challenge, Treasury said, noting, “Increased levels of supply in the market continued to contribute to accelerated movement of product through private label, which grew over 50% in the $8-$15 price points through 2H20.” As it looks to combat those conditions by streamlining and premiumizing its U.S. business, TWE added that “Work to explore the potential divestiture of selected brands and assets in the U.S. is underway.”

Still, the company has benefited from a pivot to off-premise and e-commerce channels in recent months. The priority brand stable including Stags’ Leap, Beringer Brothers, The Stag, Matua, and 19 Crimes posted depletions growth of 32% in the 13 weeks through June as off-premise gains ramped up. Treasury noted that its U.S. shipments trailed depletions by 7% for the year, “driven by industry-wide working capital management by distributors in response to the closure of key non-retail channels as a result Covid-19.”—Daniel Marsteller

Tagged : Treasury Wine Estates

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