Treasury Wine Estates (TWE) says it is making strong progress with new export markets following a $77.3 million hit in mainland China during the 2021 financial year.
TWE today announced a 1.8 percent increase in full-year net profit to $250 million. Sales were down three percent to $2.569 million.
“Pleasingly this impact (in China) was partially offset by continued growth across the rest of the region, in particular for Penfolds Bins and Icons, despite ongoing pandemic restrictions to key Luxury sales channels,” TWE says.
“Margins were impacted by one-off product rework and logistics costs, as well as committed brand investment in mainland China.”
TWE CEO Tim Ford says, “F21 was a year of both significant change and achievement for our business, with the financial results we have announced today a testament to the commitment and strength of our global teams.
“Most pleasingly, despite a backdrop of significant external disruption, we have delivered on the priorities we set for ourselves at the start of the year, and therefore we remain very well placed to deliver on the long-term growth ambitions we set out in our TWE 2025 strategy.”
TWE saw strong growth in the $10-$30 Premium portfolio in the Americas, EMEA (Europe, Middle East and Africa) and Australia and New Zealand, led by 19 Crimes, Pepperjack, Squealing Pig, Beringer Brothers and Matua.
The company is progressing with its plans to drive incremental growth for the Penfolds Bins and Icons portfolio, with global net sales revenue growing seven percent, supported by accelerated investment in sales and marketing capability to build demand and drive distribution and availability across key growth markets.
“Continued recovery in key Luxury sales channels will be an important enabler of future Penfolds portfolio growth,” TWE says.
TWE says the short-term impact of the Covid-19 pandemic on trading conditions in the company’s key markets remains uncertain, despite recent reopening in on-trade channels and improving trade through cellar doors.
“Retail and e-commerce channels continue to perform strongly, albeit with moderating rates of growth, while travel retail remains severely impacted,” the company says.
“Continued reopening of key sales channels will be an important enabler of future Luxury portfolio growth.”
TWE says wine consumption declined across Asia in 2020 as a result of the pandemic.
“Over the long term, the fundamentals of the wine category remain positive in Asia, with consumption of Premium and Luxury wine expected to return to growth.
“In mainland China, TWE will continue to invest in the portfolio as it progresses its multi-COO portfolio growth strategy, with highlights including the launch of the Penfolds Californian Collection and the release of Rawson’s Retreat sourced from South Africa.”
The company says it will continue to “closely monitor” demand trends and will adjust intake for the 2022 and 2023 Australian vintages as required.
“Key initiatives include bringing forward vineyard redevelopment programs that will reduce intake from its own asset base in the short term while postioning for growth again in the long term, in addition to reviewing upcoming grower contract renewals,” the company says.
TWE is now operating under three divisions: Penfolds, Treasury Premium Brands and Treasury Americas.
“Whilst it’s early days in this change program, it is already very clear to our teams that with each division focused on their unique strategic priorities and performance accountabilities, we are better positioned to take advantage of previously untapped growth opportunities across the globe,” Ford says.
“This is a truly exciting stage in our journey as we progress deliberately and at pace towards our ambitions and goals.”