Treasury Wine Estates: Luxury Brands Rise, But Softer Consumer Trends Impact U.S. Volume

Treasury Wine Estates has posted sales up 1.4% to A$1.28 billion ($894m) for its fiscal first half ended in December, with EBITS up 17% to A$308 million ($215m). The company got a boost from currency exchange, as sales slipped 1.1% and EBITS was up 15% on a constant currency basis.

In the U.S., Treasury Americas saw reported net sales grow 4.1% to A$485 million ($339m) in the first half, but that swung to a decline of 4.3% on a constant currency basis. Volume for Treasury Americas fell 15% to 3.4 million 9-liter cases, as luxury growth and innovation activity couldn’t offset struggles below the $15 mark. According to the company, “Category trends for luxury wine remain strong, with softer demand relative to expectations in sub-$15 price points impacting premium portfolio performance” in the most recent quarter. Still, in profit terms, Treasury Americas’ EBITS jumped 15% to A$115 million ($80m) at constant currency in the six months through December (up 35% on a reported basis).

Specifically, price increases and solid demand for luxury brands like Frank Family Vineyards and Beaulieu Vineyard boosted Treasury Americas in the first half, as did innovation activity behind 19 Crimes and Matua. But the company saw struggles for lower-priced wines, as “consumption trends for entry-level premium wine impacted the performance of the 19 Crimes Australian-sourced portfolio, with increased retail programming, innovation, and brand activation activity planned” for the fiscal second half.

The 19 Crimes and Matua brands have been among Treasury’s best performers in the U.S. in recent years. That trend continued for Matua in calendar 2022, as the New Zealand brand grew 9% to 832,000 cases, according to Impact Databank, including 64,000 cases of better-for-you entry Matua Lighter. 19 Crimes also benefited from new product activity, with its Martha’s Chard and Cali Gold offerings—marketed in collaboration with Martha Stewart and Snoop Dogg—jumping out to 170,000 cases and 65,000 cases respectively. Still, the 19 Crimes brand as a whole slipped 8.6% to just under 2.2 million cases.

Regarding the outlook in the U.S., Treasury says “trading conditions are expected to remain consistent throughout (the rest of the fiscal year through June), with increased activation for the premium portfolio planned to deliver a balanced earnings profile across the year.”—Daniel Marsteller

Tagged : 19 Crimes, Matua, Treasure Wine Estates

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