Penfolds owner Treasury Wine Estates has returned to profit in its latest financial year after a 24 month project to destroy or discount millions of bottles of excess wine in the US.
Treasury Wine Estates set aside A$61m to help distributors to sell off the equivalent of 22m bottles of lower value ‘commercial’ wine – 1.8m nine litre cases – as it sought to put its business back on a profitable footing in the world’s largest wine market.
The company has also destroyed several million bottles worth of wine to help drain stocks held in the US since beginning a ‘distributor realignment’ programme in July 2013.
The figures underline the difficulties faced by the owner of Penfolds and Wolf Blass. But, company chief exeuctive Michael Clarke previously described 2015 as a ‘reset’ year and the Australian wine producer’s latest financial results suggest improvement.
Treasury reported a net profit of A$77.6m for the year to the end of June, compared to a net loss of A$100.9m in a previous year beset by one-off charges.
Its share price rose by 13% on the Australian stock exchange following its results release, which also included an 8% increase in net sales to A$1.85bn – albeit the rate of increase would have been halved without favourable currency swings.
Treasury only sold 0.4% more physical wine during the year, at 30.1m cases, suggesting it has gone some way to succeeding in persuading drinkers to buy more of its luxury wines. Asia, and Greater China in particular, helped to lift sales.