Treasury Wine Estate’s TWE) has focused on luxury and premium wines for a number of years and the strategy continues to pay off, with the winemaker business highlighting another strong performance in its interim results announcement.
In November 2023, TWE the luxury US wine brand, DAOU Vineyards, followed by the acquisition of a majority stake in the Chinese Stone & Moon Winery in December last year and In July 2024, TWE opened its $10m automated winery in the Barossa.
In announcing its interim results TWE highlighted that its luxury strategy is working with statutory net-profit after tax up 32.5 per cent to $220.9m. In addition EBITS grew 31.5 per cent to $391.4m, which TWE said was “driven by strong luxury portfolio growth in Penfolds and the contribution from DAOU”.
Penfolds reported a 33.9 per cent increase in EBITS to $250.2m, which TWE said was, “was driven by strong Bin & Icon portfolio shipments in Asia, led by the re-establishment of the Australian country of origin portfolio in China, where there has been strong demand from customers and encouraging depletions performance”.
TWE CEO Tim Ford said: “Our interim 2025 performance highlights the benefit to the quality of earnings and key metrics from our multiyear transformation to a Luxury-led business, with this segment of the market continuing to be healthy in our key trading regions.
“We are extremely pleased to have successfully re-established the Penfolds Australian country of origin portfolio in China, with positive consumer and customer sentiment and key performance signals very clear.
“The progress we have made integrating DAOU and Treasury Americas to create the leading supplier of Luxury wine in the US market is also pleasing and we look forward to further capitalising on this opportunity in the year ahead. Calendar year 2024 has been a year of significant and successful change for TWE.”
The statement to the ASX added: “Penfolds volume and NSR profile and growth rates reflect, in part, the focus on re-building distribution in China through 1Q25 and the weighting of shipments to the second half in the pcp in anticipation of the removal of tariffs on Australian wine sold into China. On a constant currency basis, NSR and EBITS increased 24.2 per cent and 33.3 per cent respectively.”
Ford said: “Penfolds’ performance clearly was a significant highlight, led by the outstanding growth in Asia.
“With very positive sentiment towards the brand from both our consumers and our customers in that market in particular, strengthening our confidence in what we see as an incredible long-term opportunity for the Penfolds’ business.”
While Treasury Americas reported a 66.9 per cent increase in EBITS to $155.3m, the business’ luxury portfolio – excluding DAOU – declined by 8.5 per cent, impacted by lower e-commerce sales and reduced discounting on key brands.
Treasury Premium Brands was impacted by “softness in consumer demand for wine at lower price points, underperformance relative to the category and the cycling of a $9.7m gain on sale of divested vineyard assets in the prior corresponding period, with a 49.9 per cent decrease in EBITS to $22.9m.
China is once again seeing strong consumer demand for Penfolds, with category trends being positive in the first half of the 2025 financial year.
TWE said: “In online sales channels, which represent approximately 20 per cent of Penfolds retail sales in China, trends were also positive, with [first half] wine category value growing six per cent, driven by Penfolds.
“Retail pricing continues to normalise despite the availability of product at competitive prices through cross border e-commerce channels, which represent approximately five per cent of Penfolds total depletions value in China in [the first half].”
TWE said it “remains confident in the long-term growth opportunity for Penfolds in China”.
Looking ahead Ford said: “Our team has absolute clarity on our portfolio and execution priorities, with Penfolds and the Treasury Americas Luxury businesses the clear drivers of our future growth, with our global premium business playing a critical role to power and support this growth agenda.”