• Lower costs and higher margins have boosted Treasury Wine Estates' full-year profit to $179.4m. (AAP)
Treasury Wine Estates has more than doubled its annual profit and is gearing up for a big push of its US brands into China.
Source:
AAP
18 Aug 2016 - 4:40 PM 

After more than doubling its annual profit, the company behind Penfolds and Wolf Blass is set for a big push of its US labels into Asia.

Treasury Wine Estates shares hit a record high on Thursday as chief executive Michael Clarke unveiled a $179.4 million profit - up from $77.6 million, and outline the next step for the company's expansion in the critical Asian marketplace.

Asia is one of Treasury Wine Estates' fastest-growing markets, as the middle class booms and consumers embrace quality wine.

Mr Clarke says consumers in China have historically preferred French wine but have now come to like Australian product and appear ready to try US brands.

Consumers in Japan, the Philippines, South Korea and Thailand already drink US wines as they have strong affinity with American brands and American products, Mr Clarke said.

Treasury Wine's biggest Australian brands in China are Penfolds, Wolf Blass, Lindeman's and Rawsons Retreat.

The US labels set to be introduced to the Chinese market are Beringer, Stag's Leap, Beaulieu Vineyard, Chateau St Jean and Blossom Hill.

The first phase of Treasury Wine's strategy in Asia was to promote Australian brands, which are trusted as high-quality products just like Australian beef and dairy products, and are cheaper than French wine.

"The next phase in our growth is getting more and more Asian consumers to love the American portfolio as well as our Australian portfolio," Mr Clarke said.

Chinese consumers drive a mix of Japanese, European and American cars and their approach to wine should be no different, he said.

"They love great quality wine. They used to be very affectionate of French wine - that's losing ground," Mr Clarke said.

"They're becoming more affectionate about Australian wine, and we believe they'll start having their affections for great quality US wines."

Mr Clarke expects it will take plenty of hard work to get Chinese consumers to embrace US wines but the company has prepared the way by strengthening its distribution network in China.

Mr Clarke also said Treasury was considering launching another portfolio of wines into Asia - aside from the Australian and US wines - perhaps from another region.

Treasury Wine more than doubled its annual net profit in 2015/16 to $179.4 million, due to stronger sales, lower costs and higher margins across all regions.

The result boosted Treasury's shares by $1.10, or 11.52 per cent, to an all-time high of $10.65.

The company enjoyed a 64 per cent rise in earnings in the Americas, reflecting its focus on selling more high-quality wines, a six-month contribution from its Diageo Wine acquisition, and favourable currency movements.

Asian earnings improved by 40 per cent as demand for imported wine rose, while earnings in Australia and New Zealand rose four per cent.

TREASURY WINE DOUBLES PROFIT, BOOSTS DIVIDEND

* Net profit of $179.4m, up from $77.6m

* Revenue up 19pct to $2.34b

* Final dividend up four cents to 12 cents per share