Tag: export

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Australia’s Treasury Wine drops planned sale of cheaper brands, cuts profit guidance

By Byron Kaye and Sherin Sunny, Reuters | February 13, 2025

Bottles of Penfolds wine are on sale at a wine shop in central Sydney August 4, 2014. REUTERS/David Gray/File Photo
Bottles of Penfolds wine are on sale at a wine shop in central Sydney August 4, 2014. REUTERS/David Gray/File Photo

Penfolds wine producer Treasury Wine Estates (TWE.AX), opens new tab pulled the sale of its cheap drinks division after failing to find an attractive offer and cut its prediction for annual profit, sending its shares tumbling.

The division’s weak results and outlook soured an otherwise upbeat first-half result for Australia-listed Treasury as exports to China roared back to life after the end to three years of crippling tariffs imposed by Beijing.

Treasury had planned to offload budget labels including Wolf Bass and Lindeman’s last year amid a global trend of young drinkers turning away from alcohol. But “the offers received for these brands did not represent compelling value and therefore their retention is the best course”, it said on Thursday.
Net profit excluding one-off items jumped 33% to A$239.6 million ($150 million) in the six months to end-December, just short of the average analyst forecast from data aggregator Visible Alpha.

Bottles of Penfolds Grange wine and other varieties, made by Australian wine maker Penfolds and owned by Australia's Treasury Wine Estates, sit on shelves for sale at a winery located in the Hunter Valley, north of Sydney, Australia, February 14, 2018. REUTERS/David Gray/File Photo
Bottles of Penfolds Grange wine and other varieties, made by Australian wine maker Penfolds and owned by Australia’s Treasury Wine Estates, sit on shelves for sale at a winery located in the Hunter Valley, north of Sydney, Australia, February 14, 2018. REUTERS/David Gray/File Photo

That owed much to the first full reporting period of exports to China since 2020 and the contribution of recently-bought U.S. winery business DAOU.
But pre-tax profit from its “premium brands” unit, which includes its cheaper wine labels, halved, partly “reflecting softness in consumer demand for wine at lower price points”.

Citing reduced expectations for the unit, the company now expects pre-tax profit of about A$780 million for the financial year ending in June. That compares with an earlier estimate of A$780 million to A$810 million.
Treasury shares lost 4% by midsession, having fallen as much as 8% at one point as analysts downgraded their forecasts in line with the new guidance. The overall market (.AXJO), opens new tab was flat.

“With the company deciding not to sell its commercial portfolio, (the premium brands business) might be a drag on group earnings for some time,” Citi said in a note.

UBS said the guidance downgrade was “disappointing but somewhat reflected in share price”. The stock is down 4% compared to a year ago while the broader market has gained 12%.

Treasury declared an interim dividend of 20 Australian cents per share, compared with 17 Australian cents last year.

(US$1 = AU$1.5929)

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Looking Back – Pegasus Bay Wines, Mar ’24

We had Pegasus Bay wines presented to us by Ed Donaldson, Marketing Manager, who was informative and entertaining throughout the evening. Our club ordered 109 bottles from Pegasus.

Some of the information he imparted to us was:

  • Their venture started as a curiosity by Ed’s father, a surgeon 40 years ago.
  • That they have 40ha now planted in vines.
  • Their vines are not grafted from root stock.
  • They used to get grapes for their Main Divide range strictly from other growers/friends, this has now changed as they planted vines in 2008 to cover half this load.
  • There is seven family members involved in the day to day running of the business.
  • They export half of the wine they make to approx. 20 countries, including the UK, Belgium, Holland and Australia.
  • They will be 40 years old next year.

As a reminder of the wines we tasted during the evening:

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How the wine industry went from ‘preparing for the worst’ to recording record-high earnings

James Fyfe | 28/11/2020

Related video: Many winemakers say 2020 was the best vintage in decades. Credits: Video – Newshub; Image – Getty

When the nationwide lockdown was announced at very the same time as the wine harvest earlier this year, panic rippled across the viticulture sector.

And though it was later deemed an essential service and allowed to continue operating during alert level 4, the industry faced a number of challenges in the face of the COVID-19 pandemic.

Strict conditions meant wineries and vineyards had to change their way of working, adapting to tough new health and safety regulations all the while maintaining productivity.

But not only did the industry survive those trying times, it’s also now been revealed that it actually flourished, with the latest figures showing exports for the 12 months to October hit a record high of $2 billion.

Clive Jones, chair of New Zealand Winegrowers, says reaching the milestone this year came as a surprise for the industry.

“We made a bold prediction 10 years ago that we thought we could double sales from $1 billion to $2 billion by the year 2020,” Jones told Newshub.

“I guess we always thought we’d get there but at the beginning of the year we really didn’t think it would be this year.”

He said although sales had been gradually improving over the past year, there was a “big surge” in the last four or five months.

Rabobank’s latest Wine Quarterly report, published last month, noted an increase in export sales was related to more people drinking at home during lockdowns around the world, leading to an uptick in retail trade.

Jones said that was good news for New Zealand wine producers, although he acknowledged wine businesses that sell predominantly through on-premise and tourism have been harder hit.

According to the Rabobank report, sauvignon blanc makes up the lion’s share of Kiwi wine exports, with year-on-year sales to August up 131 per cent. But Jones says there is an increasing appetite for pinot noir, the second most popular export, as well as rosé and pinot gris.

The US, the UK and Australia continue to be our largest markets, and  Jones says he believes New Zealand’s reputation as being largely virus-free has helped push our brand.

“I’m also sure that New Zealand has internationally been seen in a pretty good light in recent times, so there’s a positive feeling about New Zealand.

Photo: Getty“Perhaps when people pick a bottle of New Zealand wine off the shelf and they take it home to drink they’re thinking ‘I wish I was there’.”

Jones said the industry was “preparing for the worse” when the level 4 lockdown was announced but said the sector had really rallied together to face the challenges thrown at it.

“Everyone responded positively and took the issue seriously and the safety of our people and communities was paramount,” he said.

“We were determined as an industry not to be the source of a community outbreak so thankfully we got through that ok.”

The sector is not out of the woods yet, however, with the country’s closed borders meaning there remains a labour shortage for the upcoming harvest.

Border exemptions announced on Friday allowing 2000 recognised seasonal employers (RSE) workers from Pacific countries to come to New Zealand early next year will go some way to relieving that pressure, says Jones, but it won’t be a magic fix.

He said although workers were needed for the harvest – which, depending on where in the country a vineyard is, usually takes place around March and April and lasts for six weeks – a more critical time was winter when vines need to be pruned.

The other concern is the weather.

“There’s a bit of risk of ex-tropical cyclones, which is something we want to avoid, so hopefully that doesn’t happen – we don’t want rain during harvest.”

“It was a very kind harvest in terms of weather,” Jones said.

“It was one of the best seasons we’ve had so that was the one thing we didn’t have to worry about.”

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