Treasury Wine Estates announced its FY2020 annual results yesterday, which revealed how COVID-19 had affected its trading performance across the world. While net income was down 25% to $315.8 million, with sales revenue falling 6% to $2.65 billion, there are signs of wine market recovery.
During an analysts' call, TWE's regional heads in Asia, America, Europe and Australia gave further insights into how they've been adapting their business models in the rapidly changing landscape.
Consumption back on track in China
Tom King (below), MD of Asia, said that despite the challenges in the second half of FY20, he continues to see strong and growing support for TWE's brand portfolio throughout Asia.
For the Asia region, net sales revenue declined 14.7%, driven by second half volume declines in all key regions, with the majority of sales channels being shut down during February and March.
"In China, the market is showing signs of recovery as consumption occasions resume, with improving weekly trends across all channels from April onwards and channel operation now largely back to normal," King said.
"Consumption trends are recovering quickly as more off-premise outlets reopen and traffic increases. Our depletions in the second half reflect broader market trends, with sharp declines in Q3, followed by depletions growth in Q4 driven by the list of government restrictions and also continued investment behind our core brands. June depletions were up approximately 40% on the prior year.
"E-commerce sales, already on a strong growth trajectory pre-COVID, accelerated further and TWE was the clear market leader across total wine, achieving 84% value growth in FY20 compared to 28% for the total capital.
"For TWE, sales in this channel also reflected continued premiumisation despite the broader market shift online towards lower value wine."
Brand highlights included The Rawson's Retreat Your Ideal Wine Moment digital campaign, which generated increased brand awareness with 190 million online impressions and 5% depletion growth.
In Southeast Asia, Wolf Blass showcased wine pairing with Southeast Asian flavours through recipes created by Michelin starred chefs. The campaign reached more than 20 million consumers.
Americas to halve volumes
In FY20, net sales revenue declined 12% and EBITS declined 44% in the Americans, with TWE's performance reflecting challenging US wine market conditions through the second half, including the effects of COVID-19 and the continued growth of private label.
"While retail channels continue to perform strongly, and we have seen positive momentum through our direct-to-consumer and e-commerce platforms, the pace of stabilisation in these other channels has been gradual, and as such we remain optimistic but cautious on the short-term outlook," said Benjamin Dollard (below), Americas President.
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