Market recovery slower than expected, says TWE

At TWE’s AGM this morning, the business announced that the contribution of luxury and premium wines to global NSR is up six points to 77 per cent and top line growth was achieved in all regions, except China, led by the performance of the Premium portfolio ($10-$30).

However, CEO Tim Ford said that lockdowns in Sydney and Melbourne have slowed success in on-premise and a slower recovery in the US has hindered the performance of luxury wines in that market. Additionally, interruptions to logistics and supply chain persist.

“Globally, our underlying business is performing in line with expectations, however the pandemic related factors will continue to have a bearing on our performance in the short term,” Mr Ford said.

Mr Ford said the pandemic was continuing to disrupt the market and at the end of the September quarter, “the recovery of key luxury channels impacted by the pandemic are slightly below the expectations we had at the beginning of the year”.

“This is particularly the case in the US where reopenings continue at a gradual pace, but with on-premise depletion growth slower than we had anticipated,” Mr Ford said.

However, retail and e-commerce channels continue to perform strongly.

In supporting the growth of the Penfolds brand outside mainland China, the Penfolds Bin and Icon ranges recorded growth of 15 per cent in Australia and 38 per cent in Asian markets outside of China. The company has been redirecting higher-end Penfolds to countries such as Thailand, Malaysia and Singapore, and away from China.

However, Treasury Wines chairman Paul Rayner told the annual meeting the company had not given up on the China market.

“We don’t see the Chinese market as lost,” he said.

Mr Ford said the company was close to finalising the acquisition of a winery and vineyards in France, enabling Penfolds to be produced in France as well as California which released its first vintage, the California Collection, late last year.