Michael Clarke, the Chief Executive of Treasury Wine Estates (TWE), has outlined the company’s plans for future growth during the recent Annual General Meeting.
Speaking at the AGM Clarke said that the company was making good progress against its three-phased growth strategy of fixing, growing and accelerating. Clarke added that every action taken this year will be to ensure that TWE is positioned to step change performance over the 2019 and 2020 financial years, and beyond, as an increased supply of high-end wine becomes available for sale.
When thinking about how we will drive growth through increased high-end wine supply, it’s important to recognise two things,” Clarke said.
“Firstly, from a supply perspective, this step-up in access to high quality fruit reflects not only strong vintage conditions in 2016 and 2017 but, importantly, the actions we have taken to sustainably uplift our access to supply, both from vineyards we own or control, and through grower contracts.
“Secondly, from a sales and marketing perspective, we will manage the sell through of increased supply in a balanced way, with all our regions benefiting from the step-up in high-end wine as we leverage our global reach to maintain apparent scarcity.
“Following the delivery of our high-teens EBITS margin target in fiscal 17, we have publicly set a new margin ambition of 25%. Whilst we haven’t given a timeframe for this, as a leadership team, we feel comfortable that this is the next milestone for TWE.”
Clarke added: “We have a number of building blocks to achieve margin accretion, including continued cost management across our business, premiumisation of our existing portfolios and the growth of high margin virtual wine brands – starting with our French portfolio (Maison de Grand Esprit), then expanding into other countries of origin, such as Italian.”
Chairman, Paul Rayner, added that the company is now well-set to target global growth.
“It is clear that balance, quality and sustainability are all appropriate descriptors of our earnings. Each of our regions has contributed to our results and we are now set up, around the world, to capture future growth opportunities,” he said.