Treasury puts Premium on Wine Brands

31 October, 2011 by

By Andrew Starke

Demand for luxury and premium wine in its key markets will drive Treasury Wine Estate’s strategy over 2012 with performance in the Americas and momentum in Asia both Board priorities.

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Speaking at last week’s AGM, Treasury Wine Estates (TWE) Chairman, Max Ould committed the company to investing in its premium inventory.

"Demand for luxury and premium wine continues to grow in our key markets, and we will focus on allocating capital to initiatives to ensure we are well placed to meet growing demand for these wines,” he said.

While trading conditions remain challenging, the standalone wine company believes its business is well positioned to grow over both the short and long term.

CEO David Dearie said the wine category was continuing to perform well in both the ANZ region and Asia.

Earnings in the latter market were driven by growth in TWE’s premium and luxury brands, with more resources likely to be allocated to this region.

A more subdued consumer environment, high levels of promotional pricing and the strong Australian dollar made for a tough trading environment in Europe and the Americas.

However, the wine category has remained relatively resilient in these markets with demand continuing to grow faster at the higher price points.

"We acknowledge that stabilising our commercial brand volumes in the Americas and EMEA will take some time to take effect,” said Dearie.

"Our year-to-date stock depletions in the US are outperforming our shipments to distributors, but we expect our shipments to equal depletions over the course of the full financial year.”

Dearie added that management continued to see ‘incredible growth and international expansion opportunities for our regional champion brands’, singling out Castello di Gabbiano, Stags’ Leap, Etude, Chateau St Jean, Wynns, Seppelt, Saltram, Devil’s Lair, Coldstream Hills, Matua Valley and Secret Stone as brands to watch over the coming year.

Shares in TWE were trading at $3.80 at 11am today (Oct 31), down from $3.90 seven days ago.