TWE has fought back from the impact of heavy tariffs in China, with its profit soaring 72.5% to $188.2million in its 2023 half-year results.
CEO Tim Ford told analysts the company’s earnings from its operations in China were still “minimal to insignificant” following the imposition of punitive import taxes on Australian wine in late 2020.
However, he holds hopes of improvement in the future, with Minister for Trade and Tourism Don Farrell soon to travel to the country following a successful virtual meeting with China’s Minister of Commerce Wang Wentao earlier this month.
It was the first meeting of Australian and Chinese Trade Ministers since 2019.

Ford is preparing to make his first own post-COVID-19 trip to China in March and said a locally made version of Penfolds, One By Penfolds, was delivering sales ahead of expectations. It features grapes from the Ningxia region and retails for around $50 per bottle.
“The consumer embraced it, definitely we’re going to expand,” he said.
Ford said even if trade sanctions were lifted now, it would take several years for TWE to fully rebuild its China wine volumes. Around 600,000 cases – it was previously exported by TWE to China.
“For our higher end luxury wines, it would take three years because we have to go and source more grapes,” he said.
“So if you make it this year, you don’t sell it for another three years. It would certainly take us time to increase the makes of those wines … because we’ve done such a good job of reallocating what was going to China a couple of years ago.”
The company has also energised its sales in Malaysia, Thailand, Vietnam and Singapore.
Premiumisation leads growth
TWE said its revenue growth in its half-year results was driven by its luxury portfolio and cost savings from its global supply chain optimisation project.
The company now generates 85% of its global revenue from its luxury and premium wines, compared to only 50% five years ago.
Ford said the company’s strong results demonstrated TWE’s ability to navigate challenging macroeconomic conditions and changing consumer trends.
“We are very pleased to have delivered strong progress towards our financial growth objectives in 1H23, with EBITS growth of 17% driven by improved revenue per case and EBITS margin expansion across all divisions,” Mr Ford said.
“Our luxury wine portfolios in particular continue to perform exceptionally well across all markets and channels, and the fundamentals of the category are expected to remain strong at these higher price points.
“We consider this set of results to be an important and additional proof point of our teams’ ability to navigate the changing and variable economic, consumer, and market dynamics, whilst maintaining our focus on the delivery of our financial objectives”.
Penfolds EBITS increased 11.0% and EBITS margin increased 1.7 ppts to 44.3%. Volume and NSR increased 4.4% and 6.8% respectively, driven by continued growth across the portfolio in Asia, EMEA and Australia.
The company said trends for distribution and volume growth were expected to remain consistent and strong across Penfolds priority growth markets, supporting balanced EBITS delivery through FY23, with full year EBITS margin expected to be
between 42% and 44%.
19 Crimes sales slow
The Treasury Americas business lifted earnings before interest, tax and the SGARA accounting standard by 35% to $115 million.

However, growth slowed for the 19 Crimes brand, with Snoop Dogg’s Cali Collection failing to generate the expected sales.
Ford said Snoop Dogg continued to be a winner for TWE and he expected the brand to gather momentum after adding global sales of 1.5 million cases in the past two years.
“19 Crimes we see as a growth engine for us for years to come,” he said. “It is slowing down off the rate of sales of the core 19 Crimes, as we call it, which is the Australian portfolio that has been big in the market for a decade. And that’s because we haven’t innovated for the last six to 12 months as much as we needed to.
“Our execution needs to improve and it will.”
Categories: Business