Treasury Wine Estates pins future profit on US luxury wines

Treasury Wine Estates has revealed the value of its luxury wine inventory has skyrocketed to $798million.

The amount of high-end wine the company has in storage ready for bottling has jumped from $255million and will be further boosted by a high quality 2016 harvest.

The Australian Financial Review is describing it as an "$800 million pot of gold."

The revelation follows TWE shares jumping more than 11% to above $10.60 after the company reported more than doubling its net profit after tax of $179.4 million for the 12 months ended June 30, 2016, up from $77.6 million a year ago.

Chief executive Mike Clarke said TWE had moved away from lower-margin categories in preparation for a bigger focus on higher margin sales under brands such as Penfolds and the Californian vineyards it acquired after buying the Diageo wine division for $754million earlier this year.

The company's profit windfall came from Asia, up 40% to $102 million; Australia, up by 4% to $92.3 million; and America, up 64% to $136.3 million.

TWE shareholders will be paid a higher final dividend of 12¢ per share on October 7.

The company's big push moving forward is to promote its premium American brands in Asia. 

"The first phase of its strategy in Asia was to promote Australian brands, which are trusted as high quality products just like Australian beef and dairy products, and are cheaper than French wine," said Clarke.

"The next phase in our growth is getting more and more Asian consumers to love the American portfolio as well as our Australian portfolio. They love great quality wine. They used to be very affectionate of French wine - that's losing ground. They're becoming more affectionate about Australian wine, and we believe they'll start having their affections for great quality US wines."

Clarke has also brought forward his own target of lifting profit margins for TWE to the "high teens" by two years to 2017-18.