By Andrew Starke
The Foster’s Group foray into the wine sector has been widely described by analysts as a disaster but there are signs that Treasury Wine Estates (TWA) has a few factors working in its favour.
While volumes fell by 5.9 percent for the six months to December 31, 2010, pre-tax earnings for the wine business rose 25.2 percent to $99.9 million on a constant currency basis, the second consecutive half of 20 percent plus growth.
“Improved route to market capabilities, better product and channel mix and cost reduction initiatives drove improving performance for Treasury Wine Estates,” said Foster’s Group CEO Ian Johnston.
While the strong Australian dollar and difficult trading conditions in key international markets have hurt exports, TWA performance has benefited from improvements in product, channel and market mix and lower grape costs.
“In Australia, rigorous planning and enhanced sales execution discipline, as well as the first stages of implementing a customer partnership approach has contributed to new product listings and higher volumes in both the on and off premise channels,” said Johnston.
Treasury Wine Estates has more than 3,000 employees across 17 countries and is structured into four regions: Australia and New Zealand; Americas; Europe, Middle East and Africa; and Asia.
The company predicts that international wine markets will remain challenging over the next 12 months but with some modest improvement in the consumer environment continuing.