29/04/2016
On Tuesday 10th May 2016 we have our AGM and welcome Treasury Wine Estates.
Treasury Wine Estates (TWE) is an Australian-based global winemaking and distribution business. It is headquartered in Melbourne, Australia, and until a demerger in May 2011 was the wine division of international brewing company Foster's Group.
Foster's began to build its wine division from 1995 onwards. Through acquisition, it built the division in to one of the world's largest wine makers. In 2005, it acquired the Australian famous brands including Penfolds, Lindemans and Rosemount, and also Beringer Vineyards in the Napa Valley, California.
However, the division was a poor performing business and in 2011, 99% of Fosters Group shareholders agreed to split Fosters Group business into separate brewing and wine companies. Treasury Wine Estates officially became a separately listed company on 9 May 2011.
The business is divided into four global regions: Australia and New Zealand; The Americas; Europe; Middle East & Africa and Asia. Globally the company manages over 14,000 hectares of vineyards with over 3,500 employees in 12 countries, with sales totalling over 35 million cases of wine annually.
TWE purchased the remaining 50% of Rapaura Vintners Limited from Babich Wines Limited recently. Rapaura Vintners Limited is an integrated winery, packaging and warehouse facility located in the heartland of the New Zealand wine industry in Wairau Valley, Marlborough. TWE now has full control over the state of the art facility, to be known as ‘Matua Marlborough’, and plans to expand the facility to increase the crush capacity.
Securing the Matua Marlborough facility delivers uplift in wine production capacity and provides further expansion and growth opportunity for TWE. Matua produces a wide range of distinctive, and award winning wines, including New Zealand’s first Sauvignon Blanc. TWE produces wine in New Zealand under four brands - Matua, Secret Stone, Angle Cove and Squealing Pig.
After the attempt of two separate buyout proposals was rejected by TWE, Chief Executive Mike Clarke led a rescue plan to turn the business around and has been largely successful. Earnings from the America's rose 67 per cent and European earnings more than doubled, albeit off a lower base. Asia was remarkable as well, more than doubling.
The strength of the business is based on TWE's 15 big-hitting, and big-selling wine brands – known as the Priority Portfolio - led by Penfolds, Wolf Blass, Wynns, Beringer, and Lindeman's. These brands now account for 85 per cent of sales.
Things may get tougher from here on. Pumping up sales of famous global wine is one thing, but getting the next level of brands humming will provide another challenge. TWE has launched a new marketing push for what it's calling its Australian "gem" brands, but this growth trajectory is less certain than with the big-name brands.
Clarke must also manage the integration of its purchase of Diageo's wine business, based mainly in the United States. The US has not proved a happy hunting ground for Australian wine companies in the past and while the Diageo business is built around premium US brands including Sterling Vineyards, Beaulieu Vineyards, Acacia, Provenance and Hewitt, it also comes with the lower end British brand, Blossom Hill.
Treasury Wine Estates is a sponsor of the Oracle Racing Team.