TWE’S ASIA EARNINGS JUMPED 31%, WILL BUY FRENCH VINEYARDS TO TARGET CHINESE MARKET
By Siulan Law Mathews DipWSET
Australia’s Treasury Wine Estates (TWE) reported a 31 percent jump in earnings across Asia in the first half of 2018/19 financial year, the company is looking to buy wineries and vineyards in France to target the Chinese market as a strategy to lift profit margins.
The company, which owns the famous Penfolds brand, reported a 17 percent jump in net profit for the period at AUD219.2m, fueled by earnings growth across all of its operating regions especially in Asia and China.
Earnings in Asia reported at AUD153.1m, compares to AUD77.4m in Australia and New Zealand, AUD112.1m in the Americas, and AUD26.3m in Europe.
Chief executive Michael Clarke said the company was "firing on all cylinders" across the Asian region, not just in mainland China.
"The fundamentals of the Asian wine market as a whole remain enormously attractive, and we are not seeing a slowdown in demand for our brands," Mr Clarke said.
"We also see tremendous opportunity to expand our penetration into more cities and across more partners in China. We have an ambition to expand our presence and availability by more than 50 per cent in the next three years," he said.
Despite a 8.75% drop of French wine import in China last year amid a cooling imported wine market, Clarke said TWE will still carry out its plan to buy French vineyards in the first half of this year as a strategy to add sales and penetrate further in the China market.
TWE unveiled the strategy of building an upmarket French wine portfolio to target the China market in 2017.
It was said the portfolio will closely mirror the Penfolds range and will have a super-expensive iconic wine like Penfolds Grange at the top and a variety of higher-end wines to benefit from the brand effect.
The company claimed the portfolio would be a "disrupter" and will help lift profit margin to a new level.
(the writer can be contacted at: SLawMathews@thewinechronicle.com)
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