Five key strategic priorities were instrumental in strengthening Treasury Wine Estates' performance in FY21, CEO Tim Ford said at the company’s AGM. Group priorities for FY22 are to embed sustainability further into the business, greater investment in technology as a growth platform and "relentless" focus on premiumisation.
Strategic priorities
- Embedded consumer and experience led marketing model
- Incremental global growth plans for Penfolds Bin & Icon portfolios
- Key changes for future state premium US wine business
- Advanced global supply chain optimisation program
- Accelerated the transition to brand portfolio-led divisional model
1Q FY22 channel conditions were slightly below expectations for recovery, with wholesale into Asia, on-premise and cellar doors in the Americas, cellar doors in ANZ and on-premise in EMEA disrupted. Travel and retail across all markets and on-premise in ANZ were either closed or significantly disrupted.
Asia ex-mainland China depletions grew 19 per cent in the three months to August, while the Ten portfolio in the Americas growing three per cent versus the $8+ category which declined 5 per cent.
Chair Paul Rayner said FY21 was a year of significant change, with expectations COVID-19 impacts continue into 2022.
"Alongside the pandemic, we have navigated the effective closure of the Chinese wine market to Australian wine... We recognise that, regardless of which market you operate in, businesses and brands are judged on how they act and behave, as well as the quality of their products. We are mindful of that, recognising that trust is critical to building relationships and brands and is therefore essential to our long-term success," Rayner said.
There had been some wins during the year, Wolf Blass recognised as Red Winemaker of the Year at the 2021 International Wine Competition, with Pepperjack awarded Australia's number one shiraz.
The company stepped up its sustainability objectives, releasing a host of new targets relating to water stewardship, net zero emissions, and consumer health. A new Wine Operations and Sustainability Committee was established, chaired by director Garry Hounsell.
CEO Tim Ford said EBITS of $510m was in line with FY20, and with a 0.6 percentage point increase to 19.9 per cent was especially pleasing considering the EBITS contribution from mainland China declined $77 million in the year.
Ford said the company’s shift to a consumer and experience led marketing model was a key driver for TWE. Collaborations and partnerships with celebrities and opinion leaders, and focused digital engagement drive increased consumer demand across the brand portfolio.
The company's response to Chinese trade measures included reallocating product and accelerating investment for future growth of Penfolds in other key global markets. Ford said the impact so far was encouraging, with the Penfolds Bin and Icon portfolio revenue growing 15 and 38 per cent respectively in the year.
A global supply chain optimisation program is well advanced and is expected to deliver $73 million savings per year from FY23.
Ford said he was positive for the business into FY22, led by momentum behind the Premium portfolio and growth plans for Penfolds across global channels and markets.
