Treasury Wine Estates Ltd. has indicated strong demand for luxury wines in Asia and the US, as the company, known for its Penfolds brand, prepares to undertake further business restructuring following a strategic review. Chief Executive Officer Tim Ford emphasized during an investor call that the Australian vintner’s focus will be on transitioning into a luxury wine company, with over 75% of its earnings already derived from luxury brands.
The luxury segment of Treasury Wine Estates includes high-end wines retailing for A$30 ($20) or more, such as Penfolds Bin and Icon, Wynns, and DAOU in California. Premium wines fall within the A$10-A$30 range, while commercial brands are priced below A$10.
In a move to streamline operations, the company announced plans to merge its Treasury Premium Brands business with Treasury Americas Premium by July 1, 2025. Additionally, a recent decision to divest its commercial brand portfolio, which includes Wolf Blass and Yellowglen, underscores Treasury’s commitment to focusing on the luxury wine market.
Despite challenges like economic uncertainties, shifting consumer preferences, and tariffs impacting the wine industry, demand for luxury alcohol has remained robust. Treasury Wine Estates reported strong consumption in markets like Hong Kong, Thailand, Taiwan, the US, and China. Tom King, managing director of the Penfolds brand, highlighted the positive reception of the Australian portfolio in China.
Following the news, Treasury Wine Estates shares initially rose by 2.6% in Sydney before settling near A$12. The company also provided an optimistic earnings forecast for 2025, projecting a range of A$780 million to A$810 million.
Overall, Treasury Wine Estates’ strategic moves and focus on the luxury wine segment reflect its commitment to meeting evolving market demands and sustaining growth in key regions.
