Covid-19 Cuts Luxury Wine Sales, Says Treasure Wine Estates
The decline in luxury sales during Covid-19 restrictions impacted sales at Treasury Wine Estates (TWE), with net profit down 25% as a result.
In results released today, TWE said that an “unfavorable volume and portfolio mix” in the second half through June was due to the closure of high-end restaurants and to consumers who pulled out. turned to low-priced wines in certain markets. Sales in the United States have been particularly affected by the pandemic.
Total sales fell 6 percent to $ 2.65 billion, while net income attributable to shareholders was $ 315.8 million.
TWE’s key brands include Beringer, Wynns Coonawarra, Lindemans, Wolf Blass and Penfolds.
CEO Tim Ford said the last fiscal year was “a unique moment” for the company.
“Our ability to weather the disruption of the Covid-19 pandemic throughout the second half of the year and continue to generate profitability and strong cash flow performance is representative of the fundamental strength of our global business. “
Revenues in the Americas fell 37% as channels other than retail and e-commerce were shut down to enforce social distancing. Profits in Asia fell 14 percent and Australia and New Zealand fell 16 percent.
In Europe and the Middle East, a strong performance in the UK distribution channel was offset by declines in Continental Europe, the Middle East and Africa due to channel closures.
Meanwhile, the company said the volume of Australian vintages fell 30% this year, with luxury wine consumption down 45%. Higher production costs in Australia will likely increase the cost of goods by about 3% per case, or $ 50 million. However, the company has a stock of unsold wine which will ensure stable volumes on the market.