Treasury says demand for luxury wine remains strong in its key global markets, driving growth in FY23 earnings up by 11.4 per cent to $583.5 million.

The firm remains profitable, though its net profit after tax result in the latest financial year was softer, falling 3.3 per cent to $254.5 million.

This is largely due to a material items loss of $76 million, which relates to the implementation of its new ‘Treasury Premium Brands’ operating model and the restructuring of its Australian wine supply chain, but somewhat offset by material items cash inflow of $34.5 million.

If not for these one-off costs, the company says its profit after tax would have risen by 16.6 per cent to $376.1 million.

The wine business expects costs for both the premiumisation program and its wine supply chain restructure to continue into the next financial year.

Overall earnings growth was propelled by a 14.2 per cent uplift from Penfolds, which contributed $364.7 million during the 12 months. The company says growth was delivered through sales to Asia, Australia and EMEA (Europe, the Middle East and Africa).

In addition, the launch of Penfolds’ new limited-release artist collaboration range of wines made by global vintners ‘ONE By Penfolds’ contributed to net sales revenue growth, particularly in Asia.

The company says its total intake for vintage 2023 was down compared to the prior year, and that it was a “high-cost vintage”. This reflects recent data from Wine Australia, which detailed how “very challenging and seasonal conditions in most regions” meant the national wine grape crush was down 24 per cent below 2022 numbers and the lowest since 2000.

Treasury’s Americas business also saw earnings rise by 14 per cent to $203.9 million. Strong performance from luxury brands Frank Family Vineyards and Beaulieu Vineyard was partially offset by shipment declines for labels 19 Crimes and Sterling Vineyards.

With relationships between Australia and China appearing to improve, Treasury said it would “take a measured approach to the phasing of Penfolds shipments across all markets to retain the flexibility of its global distribution and pricing model”.

The company says its long-term objective is to deliver sustainable top-line growth, high single-digit average earnings growth and a group positive earnings margin target of 25 per cent.

“In FY23, we have once again delivered margin accretive earnings growth while continuing to navigate the tightening economic environment across a number of our key markets,” Treasury Wines CEO Tim Ford said.

“The Penfolds result was the standout, with strong top-line Luxury growth reflecting the unparalleled strength of this exceptional brand and outstanding execution by the team.

“We enter FY24 with confidence that the execution of our premiumisation strategy will continue to deliver our long-term growth ambitions through the cycle. We are a much stronger business today and are well placed to succeed in the current macro-environment where consumer demand for Luxury wine is strong and Premium wine remains resilient.”

In a joint letter from Treasury CEO Ford and outgoing chairman Paul Rayner, who announced his resignation today, the pair said Penfolds had “cemented its position as a global luxury icon”.

“Underpinning the brand’s appeal in established and emerging markets is the focus on quality; the renowned Penfolds house style,” they said.

“A new tier in the Penfolds range – ‘One by Penfolds’ – was launched in September 2022 as a dynamic way of engaging the ‘new luxurian’ consumer with wines from the US, France, and for the first time – China.

“One by Penfolds leverages the brand as a hallmark for heritage, and realises our long-held ambition to make wine in China. The China red blend, featuring grapes from the Ningxia region of China, is now available alongside the US and French wines after the Hong Kong launch in early FY24.”

The pair added that the company is continuing to invest in its portfolio of no-alcohol and low-alcohol products.

“With world-class winemakers, cutting-edge technology, and a wealth of consumer insights, we’re taking a leadership position in this growing segment,” Rayner and Ford said.

“On the heels of the award-winning Wolf Blass Zero range, the latest product in the portfolio to tap into the moderation trend, Pepperjack mid-strength, leverages the brand recognition of Australia’s favourite Shiraz with half the alcohol content at 7 per cent ABV.

“We also launched our first Alcohol and Health Policy, setting out our position and commitments on issues such as product transparency, reducing harmful consumption and responsible marketing.”

[solstice_jwplayer mediaid=”Plfc7vQ1″ playerid=”Meorb6nj” caption=”Sponsored video: The Post” /]