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Treasury Wine Estates announces French Beaulieu wines

The French wines are primarily for the Asia market
by Kerana Todorov
February 15, 2019

Treasury Wine Estates plans to produce a Beaulieu Vineyard wine in France primarily for the Asia market.

The new wine expands Treasury Wine Estates’ French country of origin portfolio which also includes Maison de Grand Esprit and Penfold’s French champagne, Treasury’s top executives said Wednesday.

The new Beaulieu Vineyard wine is already in production; it will appear on the shelves in June/July, according to the company.

These were among the updates given Wednesday – or Thursday in Australia - as Treasury Wine Estate’s interim results were announced for the Fiscal Year 2019 quarter that ended Dec. 31.

Treasury Wine Estates may also buy two or more wineries – and vineyards - in France, according to the Australia-based company which wants to expand its distribution coverage in China by 50 percent in the next three years.

“We want our infrastructure, we want a permanent team on the ground and the beauty is you can also have visiting winemakers, especially from Australia, going to France because it's contra season obviously, for two different vintages,” said Treasury Wine Estates Chief Executive Officer Michael Clarke said Wednesday.

An acquisition in the United States is still “in the cards,” Treasury Wine Estates’ Clarke also said. It has to be the right price and in a way that can get the right returns for Treasury Wine Estates’ shareholders, Clarke said.

Treasury Wine Estates continues to sell US products in Asia in spite of the trade wars. In the short term, the company plans to “eat” the trade war additional tariff or tax, Clarke said.

Pre-tax profits for Treasury Wine Estates were up 19 percent during the second quarter, with strong growth in all regions. Results have exceeded expectations, Clarke said.

The US division’s pre-tax profits were A$112 million – or about UD $79.5 million, according to the company.
Treasury Wine Estates has focused last year on the execution of its route-to-market transition in the United States. Company representatives said they are happy with the results in the first nine months of its implementation.

“Our underlying philosophy is to be as close as possible to the end customer in our key markets, allowing us to better drive the growth of our brands and also capitalize on our core competency of building collaborative relationships that deliver value growth for both our partners and ourselves ” Clarke said.

Victoria Snyder, president of Treasure Wine Estates Americas, praised the route-to-market team for its “great job.”

The company has changed 40 percent of its route-to-market, Snyder and Clarke said. It self-distribute 25 percent while regional partners distribute the other 15 percent.

The new direct model in Florida and California is working well, Clarke said. The company continues to improve parts of the system.

“I'm very pleased with the progress made in our first nine months and know that there is still opportunity to improve our model and performance even further,” Clarke said.

Treasury Wine Estates’ net sales revenues grew 16 percent during the quarter that ended Dec. 31. “This is the strongest organic net sales revenue growth in our history.” Clarke said.

Treasury uses a wholesale model in China, where the company acts as its own distributor instead of relying on a third party to sell their brands.

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