Shares of Treasury Wine Estates have surged by 10% in the past month, climbing to over AU$12. Despite peaking at nearly AU$20 in 2019, the company’s recent performance marks a significant recovery.
The improvement follows a strategic overhaul in response to China’s tariff regime, which had severely impacted the company. Treasury Wine Estates has since streamlined its operations, shedding commodity lines in the US and expanding into Southeast Asian markets.
A recent bullish presentation to US investors has further fueled the stock’s rise. The company confirmed it is on track to meet profit forecasts for the year and highlighted positive developments in its US operations. Notably, last autumn’s acquisition of Daou Vineyards in California is expected to drive long-term growth for Treasury Americas.
Treasury Wine Estates has positioned itself as the leading luxury wine business in the US, filling a critical market gap in the US$20 to US$40 per bottle range and enhancing its luxury portfolio priced above US$40. The company sees substantial value creation opportunities by leveraging the strengths of Treasury Americas and Daou.
Market analysts suggest that the expanded scale of Treasury’s US operations might lead to the creation of a standalone Treasury Americas Luxury division, operating alongside the iconic Penfolds brand.
For the current financial year, Treasury Wine Estates reaffirmed expectations of mid to high single-digit growth, excluding a US$24 million contribution from Daou in the second half. The company projects earnings for Treasury Americas to be between $223 million and $228 million, driven by growth in the luxury portfolio and stable revenue from the premium portfolio compared to the previous year.
