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Treasury Wine Estates Ltd. (TWE), Australia’s largest winemaker, plans to boost Chinese gift sales with trophy products similar to its $168,000 bottle of 2004 Penfolds Cabernet Sauvignon

Treasury Wine Readies China Gifts Modeled on $168,000 Ampul

Treasury Wine Estates Ltd. (TWE), Australia’s largest winemaker, plans to boost Chinese gift sales with trophy products similar to its $168,000 bottle of 2004 Penfolds Cabernet Sauvignon released last year. The Cabernet, contained in a glass ampul mounted inside a wooden cabinet, is “the sort of gifting that we really want to go out there” in Asia, David Dearie, chief executive officer, said in an interview yesterday. Treasury rose to a record today in Sydney trading. The company spent several hundred thousand dollars last year researching China’s wine-buyers, said Dearie. Treasury is using its findings to tailor products to Chinese consumers after success targeting Hispanic drinkers with Beringer’s Los Hermanos label in the U.S., he said.

Treasury expects a “very big second half” from March and May releases of its Penfolds brand.

The winemaker rose as much as 5.1 percent to A$5.57, headed for the highest since it was spun out of Foster’s Group Ltd. in May 2011, bringing the two-day gain to a record 14 percent, as of 1:57 p.m. Sydney time. The S&P/ASX 200 Index fell 0.4 percent.

The company yesterday reported first-half profit of A$52 million ($53 million), beating analyst estimates.

Treasury is developing alternative packaging for wine given as gifts in China and using marketing developed for Asia, where profit margin was double that in other regions in the six months ended Dec. 31, Dearie said.

Asian sales had a 30 percent margin on earnings before interest, tax, and adjustments for the value of vineyards, the Melbourne-based winemaker said yesterday.

“There’s so much rich pickings in wine if we just get creative,” Dearie said by phone. “We’ve been a little bit lazy as an industry.”

Extravagant Spending

A crackdown on extravagant spending by officials as part of incoming President Xi Jinping’s austerity drive in China wasn’t slowing sales into the country, Dearie told an investor call yesterday.

Treasury was inspired by the success of the Los Hermanos range, marketed by its U.S. label Beringer to Hispanic consumers, and the limited-edition $168,000 bottle, Dearie said.

Sales volumes to China and Hong Kong rose 24 percent in the first half, and the company expects total market demand to increase from between 120 million and 130 million nine-liter cases at present to 250 million to 500 million in five years, Dearie said.

To contact the reporter on this story: David Fickling in Sydney at dfickling@bloomberg.net

Sent from my iPhone

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About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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