Treasury Wine Estates to split 'premium' from 'luxury' - results data

Six-month sales dip 2.3% to AUD1.28bn (US$828.9m)
Penfolds operations up 8.2% from six months to end of December at AUD448.1m
Treasury Americas slides 6.5%, ‘Premium Brands’ down 7.9%

The announcement was made in today’s announcement of six-month results that saw sales in the half-year to the end of December fall by just over 2%. The slip represents an improvement on the -4.9% sales performance in fiscal 2023, to the end of June last year.

On the figures front, Treasury enjoyed a healthy performance from its Penfolds brand, which rose in sales-by-value terms by 8.2%. The strong showing for the business unit, which accounts for around one third of group sales, countered the respective 6.5% and 7.9% slides from the Americas and Premium Brands reporting divisions.

The company described market trends in its H1 as having been “broadly in line with expectations, with continuing strength of demand for luxury wine in key markets, resilience in premium wine and continued shift of consumer preference away from commercial wine”.*

Treasury also highlighted that despite persistently declining sales in recent years, the share of sales from its combined luxury & premium brands has risen from 73% at the end of 2020 to 86% by the end of December.

Part of this increase is due to October’s up to-US$1bn acquisition of Daou Vineyards in California. The business, which plays in the $20-to-$40-per bottle price bracket, is forecast to deliver “annual, low double-digit [sales] growth” for its new owner over the medium term.

Reference was also made to the ongoing review of tariffs on Australian wine imports by the authorities in China. Announced late last year, the review is expected to conclude next month, with Treasury saying today that it is “well placed to re-establish our Australian country-of-origin portfolio in China, should tariffs be removed”.

Turning to its operational review, CEO Tim Ford told Global Drinks Intel that the assessment will be more wide-reaching than last May’s review of the Premium Brands division. For example, Treasury Americas will separate its sales and marketing units along ‘luxury’ and ‘premium’ lines later this year. Speaking exclusively to Global Drinks Intel following the results, Ford added that “all options are on the table” for the project, with a decision scheduled to be taken before the end of 2024.

“I am pleased with the ongoing underlying performance of Treasury Wine Estates this period, with strong consumer demand for our priority luxury brand portfolio continuing around the globe,” said Ford in the results announcement. “Penfolds continues to perform and strengthen, whilst Treasury Americas has made significant progress in reshaping its portfolio focus with continued growth of its luxury brands now supported by the acquisition of Daou.

“The premium wine category, whilst resilient, is highly competitive and we continue to innovate and invest to achieve the goal of outperforming the category and importantly attracting new consumers to wine.”

See below for a company-sourced video, featuring Ford.