Luxury demand drives Penfolds growth

Image courtesy Treasury Wine Estates.

Addressing the media this morning, chief executive officer Tim Ford announced the results of Treasury Wine Estates’ (TWE) financial year for 2023.

With an increase of 11.4 per cent, TWE recorded $583.5 million in its earnings before interest and taxes (EBITS). Ford explained that luxury demand was a significant contributor to the brand’s growth.

“Our performance was driven by continued growth in our luxury portfolios, where a momentum remains very strong, particularly for Penfolds,” said Ford. He also cited price increases across brands with strong equity as a reason for their success, with 85% of TWE’s global revenue now generated from the premium and luxury portfolios.

Whilst net sales revenue declined by 2.2%  to 2.4 billion, the revenue per case increased by 13%.

Premiumisation trends in key markets were in its favour, something which TWE expects to continue into the 2024 financial year.

After launching the solar installation in the Barossa Valley last month, Ford said that the company intends to roll out a similar system in California, with the company  “on track” to deliver on its target of 100% renewable electricity across their operations by the end of the 2024 calendar year.

Speaking about the brand’s sustainability goals, Ford explained that not all targets were able to be met.

“We did not achieve our goal for 100% of our packaging to be recyclable, reusable or compostable by the end of 2022 calendar year,” said Ford. This was attributed in part to challenges within the wider industry.

Looking at the financial year ahead, Ford said:

“Our confidence in our future trajectory is underpinned by our diversified global business model, our brands, our markets, our channels, and the multiple country of origin portfolios which has proven to be a significant strength, enabling us to adapt and respond to the ever changing consumer and economic environment, over the past year in particular.”

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