The behaviour of wine drinkers is evolving in favour of fewer tipples, but with a focus on top-tier varieties, one of Australia’s premium wine producers says.
Treasury Wine Estates, which owns the globally recognised luxury Penfolds brand, now plans to focus a good chunk of its resources on its top 10 “power brands”.
This segment, which includes Penfolds, Daou and Matua, already contributes 72 per cent of gross profit on 25 per cent of the stock exchange-listed company’s wine volume.
“Our power brands will represent the largest growth opportunities,” chief executive Sam Fischer told investors at a strategy day on Thursday.
“These are scalable brands with the ability to win across multiple markets.
“Collectively, they will receive disproportionate investment and organisational focus to support our growth ambition.”
For instance, Treasury Wine’s luxury red wines, including blends, Cabernet, Shiraz and Pinot Noir, already do well across China, the rest of Asia and Australia.
The story is the same for its luxury whites, including Chardonnay, Sauvignon Blanc and sparkling wines produced under the Penfolds Yattarna, Frank Family and Doau brands.
“Wine has played an enduring role in society for thousands of years,” Mr Fischer said.
“People all over the world enjoy wine as they celebrate, connect, and relax, and while we believe that these underlying occasions will endure, we do need to acknowledge that wine consumption is evolving.
“Luxury wine remains highly attractive, underpinned by the ‘premiumisation’ trend, as people drink less but better.”
At the same time, Treasury Wine has noted that consumers are seeking lighter wine styles, including low alcohol varieties, which now make up about 30 per cent of its volumes.
These wines – including Wynns, Squealing Pig, Stags’ Leap and Coldream Hills – as ‘regional heroes’, are also in line for more investment.
“Our ‘future state’ portfolio will be centred around three clear growth pillars,” Mr Fischer said.
“Strengthening our red wine leadership, our luxury red wine leadership in key markets, building a stronger position in luxury white wine, and growing our position in ‘modern refreshment’.”
However, Mr Fischer also flagged the possible sale of some of the group’s Americas business, pending a review.
He pointed to supply chain issues at its California vineyards, adding that the company had already reduced grower intake and left some to lie fallow.
“Currently, we are not generating an appropriate level of return for the capital that we have allocated in that business, and the focus of the review will be to consider a range of options,” Mr Fischer said.
“These options could include further refinement of our operating model, the acceleration of initiatives across the supply chain or the sale of selected brands or assets.”
In February, the group reported a first-half bottom-line net loss of $649.4 million, due to a previously flagged impairment related to its US assets.
Stripping out that impact, its interim net profit was $128.5 million, down 46.3 per cent, while earnings before interest and tax came in at $236.4 million.
For the full 2025/26 year, Treasury Wines is now forecasting underlying earnings between $480 million and $490 million.
The company’s shares rose 12 per cent to $4.62 in early trading.
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