Treasury looks beyond Penfolds for growth

Treasury Wine boss Michael Clarke says Penfolds helped earnings in the first half but the winemaker will now shed light on other brands for growth.

Treasury Wine Estates is looking to cultivate demand for its top shelf labels - and not just Penfolds.

The maker of wines, including Wolf Blass, Lindeman's and Pepperjack, says the first half of the financial year was "all about Penfolds", with the 2014 release of the Bin Series and Icon and Luxury Collection moved from March and May to October, significantly lifting earnings.

Treasury Wine made a net profit of $42.6 million in the period, down 60 per cent from a year earlier when it benefited from a large tax offset.

Half year revenue increased eight per cent to $934 million despite selling 200,000 fewer cases from a year ago, as the proportion of luxury wine sold - along with margins - lifted.

But to uncork demand in the second half, the company plans to increase marketing for its other brands.

"We're now addressing the under investment in our other brands beyond Penfolds," chief executive Michael Clarke said.

"Large marketing campaigns need to become the norm, not a one off."

A Cricket World Cup sponsorship by Wolf Blass is one example of this increased advertising.

But Penfolds will not be forgotten, with Mr Clarke hinting that upcoming vintages will be held back to preserve the brand's prestige.

"We are deliberately going to be holding certain things back - just to prove a point," he said.

"We are going to be very disciplined in how we nurture this brand going forward."

Since joining the winemaker last April, Mr Clarke has weathered a bout of challenges, including takeover offers, and instigated a major structural overhaul.

The company has also carried out heavy destocking across all four of its geographic regions, clearing 600,000 cases in the US alone, by plucking wine off shelves and reducing top-up shipments.

"The objective is to try to get to a healthier base of inventory levels carried by retailers and distributors," Mr Clarke said, noting that it also clears up space for new marketing programs.

The destruction of 240,000 cases of old and obsolete wine in the US is on track to be finished this year, with an estimated cost of $33.8 million.

Mr Clarke said Treasury's half year performance should be viewed as a progress update, towards sustained success for the winemaker.

"We are crawling, walking, then running - there is still a lot of fixing to be done."

FANCY WINE HELPS TREASURY'S SALES

* Half year profit of $42.6m, down 60 pct from $106.2m in 2013/14

* Revenue of $934.3m, up 8.1 pct from $864.2m

* Unfranked interim dividend of 6 cents, unchanged


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Source: AAP


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