TWE poised for growth

TWE has reported 28 per cent growth, excluding mainland China where business fell to just $2m in the first half of FY22.

The overall EBITS for the company declined by 6.7 per cent to $262.4m with losses to China partially offset by growth for Penfolds, a strong performance in the US and an increase in margins as the business establishes itself in the premium wine market having divested its commercial brands and assets. Overall profits fell by 7.5 per cent to $109.1 million.

CEO Tim Ford said that the business has now shifted gear and is poised for growth.

“Following the past two years of significant change within TWE and the markets in which we operate, we have shifted our focus from a mindset of ‘recovery and restructuring’ to one of ‘growth and innovation’. We have great confidence that by leveraging the unique strengths of our business – our people, our brands and our asset base – we are well placed to capitalise on the significant opportunities across the global markets in which we operate,” said Mr Ford.

Now, said Mr Ford, “sticking the course and driving growth is the key mantra”.

Treasury Americas recorded a 19 per cent increase in EBITS to $39.0m, demonstrating that TWE's strategy to premiumisation is now well in place, explained President Ben Dollard, with non-priority US brands and assets divested and the acquisition of luxury winery, Frank Family Wines now complete. 

Frank Family Wines earned $14.7m in the first half of FY22, Mr Dollard said, and the acquisition has made TA the leader of the luxury Chardonnay market in the US.

TA has released 19 Crimes Cali Rose, leading the US wine market innovation for the second year running, and signed Snoop Dog’s friend, Martha Stewart for the release of 19 Crimes Martha’s Chard which has been well received by consumers and reviewers early into its release.

In Asia, TWE’s plan to “recruit new consumers” to Penfolds is well in play, said Tom King, Managing Director, Penfolds. Excluding China, EBITS in the region were up 32 per cent with Penfolds stock re-directed, distribution expanded in key markets and eye-catching premium partnerships in place.

Growth was recorded in Malaysia, Singapore, Thailand, Hong Kong and Taiwan. Penfolds has performed well in Thailand and Malaysia while Wynns has done well in SE Asia and in Hong Kong.

Mr King said that Penfolds continues to have a presence in China and that consumer demand persists, demonstrated where inventory is still available although price point has increased. The California Collection and inaugural French Penfolds portfolio is expected to launch in China in August and the business continues to explore the potential for a China sourced portfolio.

Supply chain disruptions and the increased costs associated continue for TWE, as for all industry.

TWE also anticipates higher levels of inventory – and lower grape and bulk wine prices - in Australia now that China is off the table. In response, TWE is planning for a smaller intake of grapes to reduce its throughput from the 2022 vintage.

This, along with increased supply chain costs, are expected to lead to higher pricing on selected brands.