Penfolds maker doubles down on China

The maker of Penfolds, Treasury Wine Estates is focused on the re-establishment of its Penfolds Australian portfolio in China following the removal of tariffs.

As part of FY24 results the company told investors that it immediately began re-establishment in the fourth quarter, with strong shipment demand from customers and initial depletions in line with expectations.

“With global demand for the Penfolds Bin & Icon portfolio expected to exceed availability in the near term, TWE has implemented price increases across a number of key Bin & Icon portfolio wines, effective from 1 July 2024.

“In addition, the record Luxury wine intake from the 2024 Australian vintage will support a significant step-up in availability of Bin & Icon portfolio wine from 2H26, with expansion of sourcing from future vintages a priority to support incremental portfolio availability and growth.”

Statutory NPAT $98.9 million, down 61.1 percent, reflecting post-tax material items loss of $318.1 million relating primarily to noncash impairment of goodwill and Commercial brands.

Earlier this month Treasury announced the impairment and said it would sell a range of underperforming commercial wine brands including Wolf Blass, Yellowglen, Lindeman’s and Blossom Hill.

In F25 Penfolds expects to deliver low double-digit EBITS growth, driven by price increases and a modest increase in shipments for the Bin & Icon portfolio.

This will be partly offset by a step-up in brand building investment and overheads in China of approximately $20 million.

EBITS margin is expected to improve to within the range of 43-45 percent.

Treasury has been undergoing a process of premiumisation of its wine portfolio with the other driver the December 2023 acquisition of US luxury wine business DAOU Vineyards for US$900 million.

“Following the acquisition, Treasury Americas is the leading Luxury wine business in the United States with a portfolio that includes DAOU, Stags’ Leap, Beaulieu Vineyard, Frank Family Vineyards and Beringer.

“The contribution of DAOU in 2H24 was in line with expectations, with EBITS of US$24.7 million.”

Further reading:
Penfolds maker in commercial wine brand selloff
Treasury Wine Estates in huge US wine brand buy

Picture: DAOU Vineyards