• The expansion of the Penfolds brand into other country varieties has been a success for Treasury Wine Estates. In 2018, Penfolds chief winemaker Peter Gago, senior winemaker Stephanie Dutton and winemaker Andrew Baldwin (above) re-established the Penfolds footprint within the northern hemisphere and embarked on the 2018 harvest.
    The expansion of the Penfolds brand into other country varieties has been a success for Treasury Wine Estates. In 2018, Penfolds chief winemaker Peter Gago, senior winemaker Stephanie Dutton and winemaker Andrew Baldwin (above) re-established the Penfolds footprint within the northern hemisphere and embarked on the 2018 harvest.
  • Treasury Wine Estates CEO Tim Ford at the opening of the Barossa production facility.
    Treasury Wine Estates CEO Tim Ford at the opening of the Barossa production facility.
  • The expansion of Penfolds into other country varieties has been a success for Treasury Wine Estates. In 1998-99, vines from Magill Estate and Kalimna Heritage Selection were planted at Penfolds’ newly purchased Camatta Hills Estate, Paso Robles in California. This inaugural release is made predominantly from Napa Valley cabernet parcels, but each wine contains significant addition of flagship-worthy shiraz (Quantum) and cabernet (Bin 149) from the South Australia grapes.
    The expansion of Penfolds into other country varieties has been a success for Treasury Wine Estates. In 1998-99, vines from Magill Estate and Kalimna Heritage Selection were planted at Penfolds’ newly purchased Camatta Hills Estate, Paso Robles in California. This inaugural release is made predominantly from Napa Valley cabernet parcels, but each wine contains significant addition of flagship-worthy shiraz (Quantum) and cabernet (Bin 149) from the South Australia grapes.
  • More than 100 million litres of wine will be produced at Treasury Wine Estates’ new production facility in South Australia’s Barossa Valley, said to be the largest in the Southern Hemisphere. It is the first wine production facility to use Automated Guided Vehicles to manage barrel movements.
    More than 100 million litres of wine will be produced at Treasury Wine Estates’ new production facility in South Australia’s Barossa Valley, said to be the largest in the Southern Hemisphere. It is the first wine production facility to use Automated Guided Vehicles to manage barrel movements.
  • The new French release is led by a Penfolds II, made in partnership with Dourthe Bordeaux.
    The new French release is led by a Penfolds II, made in partnership with Dourthe Bordeaux.
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Premiumisation pays dividends for Treasury Wine Estates

By Kim Berry | 15 February 2023

Treasury Wine Estates continues its positive results and forecast trajectory three years on from China imposing massive tariffs on the Australian wine industry that forced the company to rethink its entire overseas strategy.

A year ago in its H1 F22 reporting, TWE CEO Tim Ford said the company was shifting its mindset from ‘recovery and restructuring’ to ‘growth and innovation’.

Twelve months on, Ford was upbeat presenting H1 F23 results, reporting strong earnings growth and margin expansion. Earnings Before Interest, Tax, SGARA, and Material items (EBITS) was up 17 per cent to $307.5m and EBITS margin up 3.2% to 23.9%.

The company expects trading conditions to remain “broadly consistent” with 1H23.

Ford said softer than expected consumption trends in 2Q23, in entry level Premium wine in the UK and US, and Commercial wine globally, did contribute to volume declines in Treasury Americas and Treasury Premium Brands.

He said despite prevailing global economic conditions of higher interest rates and a tougher time all round, the Luxury wine market was strong.

Summary
  • Net sales revenue (NSR): $1284.5m, up 1.4%, driven by favourable foreign exchange rate and Luxury portfolio growth across all divisions;
  • NSR per case: $108.6m, up 13.5%;
  • Earnings Before Interest, Tax, SGARA, and Material items (EBITS): $307.5m, up 17.2%;
  • Net Profit After Tax (NPAT): 188.2m, up 72.5%; and
  • NPAT before Material Items and SGARA: $193.7m, up 18.7%.

Penfolds performed well for the group, with net sales revenue up 7.2 per cent to $410.2 million and EBITS up 10 per cent to $181.6 million.

The company said Penfolds’ expansion into a multi-country of origin portfolio was a highlight of 1H23, with the inaugural release of the French Collection and the launch of One by Penfolds, and its first Penfolds production in China. Ford said, “Penfolds is bang on where we expected it to be”.

The poor performance of the Australian sourced 19 Crimes range in the US would be addressed in 2H23 with increased retail programming, innovation, and brand activation activities.

TWE’s global supply chain optimisation program delivered $28 million cost of goods sold (COGS) savings, with benefits realised across all divisions. It minimised the impact to mix-adjusted COGS per case from higher cost 2020 Australian and Californian Luxury vintages and supply chain cost inflationary pressures.

A 27 per cent increase in corporate costs was due to cloud-based technology investments and increases in staff remuneration.

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