Treasury Wine Estates Ltd. (TWE), the world’s second-largest traded wine maker, may increase sales this year in Europe, the Middle East and Africa, helped by its Wolf Blass and Lindeman’s brands, according to an executive.
“From an EMEA perspective, our business is very focused on the U.K. and Nordics” where Treasury is starting to see a return to growth, Andrew Carter, managing director for Europe, Middle East and Africa, said in an interview today. “As I look to 2014, I expect volume and value growth.”
Shares in the Melbourne-based winemaker fell to their lowest in seven months in Sydney after the company said yesterday in a statement that full-year earnings may be as much as 7.6 percent below analyst estimates. Annual volume declined 3.1 percent in Europe, the Middle East and Africa last year while revenue per case, excluding currency fluctuations, rose 2.9 percent, the company said.
The U.K. represents the majority of volume for the region, while the Nordic countries are a “major part” of its profit, Carter said, without elaborating.
Treasury is seeking to sell more high-priced wine, Carter said, focusing on brands in the so-called “masstige” category, including Wolf Blass, with prices between 6 pounds ($9.34) and 10 pounds in the U.K.
Treasury is experiencing a “challenging” Nordic market and taking action to combat a decline in demand for Australian wines. Nordic consumers are choosing more European, particularly Italian wines, and favoring sweeter, higher-alcohol and fuller-bodied labels, Carter said.
Treasury is seeking to export better-matched wines from its selection, including variants of the Lindeman’s brand, he said. It’s also targeting consumers in Eastern Europe and Russia.
The Australian dollar has declined 10.5 percent this year against the pound and 16.5 percent against the euro, sparking concern that while profit from shipments from Australia overseas may increase, winemakers may cut prices in markets including the U.K. to spur a greater volume of sales.
“Each time it weakens it gives us more investment to build our brands,” he said, referring to the Australian dollar. “There is no future in trying to discount our wine brands; the only future is around building brands.”
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