TWE - Treasury Wine Estates

[Dona Ferentes]

If drinkers are feeling the impact of higher interest rates, Treasury Wine Estates chief executive Tim Ford says they’ve got a funny way of showing it.

He’s seeing no signs that consumers are trading down to cheaper drops. Sales of plonk above $30 a bottle are growing in Australia, US and Asia and holding steady in Europe, while mid-market buyers – spending between $15 and $30 a bottle – are tending to drink less often, but buy more expensive wines when they do...

 

[JohnDe]

If drinkers are feeling the impact of higher interest rates, Treasury Wine Estates chief executive Tim Ford says they’ve got a funny way of showing it.

He’s seeing no signs that consumers are trading down to cheaper drops. Sales of plonk above $30 a bottle are growing in Australia, US and Asia and holding steady in Europe, while mid-market buyers – spending between $15 and $30 a bottle – are tending to drink less often, but buy more expensive wines when they do...

Word of caution; during profit reporting season, businesses like TWE comment on past figures. And just like the RBA is hoping that increasing the interest rate will slow inflation but not cause a recession, no one really knows what pressure the higher interest rates are adding. Though it is usually the working poor that feel the effects.

I've noticed that clean skin wine sales are on the up.

Markets don’t understand interest rate pressures hitting Australians

Markets do not appreciate the turmoil that is taking place among the 15 or so per cent of employed Australians who are now on the brink of financial desperation. They have suddenly moved from last year’s state of wellbeing to one where they simply can’t make ends meet on their current income.

Yesterday as the Reserve Bank Governor was speaking to parliament and Commonwealth Bank chief executive Matt Comyn was warning that households were under strain, I was yarning with a small business operator in an outer Melbourne suburb. He graphically described what was happening to the lives of many in his customer base.

Income is still coming but it is not enough to pay the bills. There is a deep seated anger that this suffering is being imposed on them by people who don’t know what they are doing. The seeds of civil disobedience are being sown as some people chose which bills to stop paying.

Some chose rent in the belief that it will be very difficult to evict them under the Victorian (and Queensland) tenancy laws. Some heavily borrowed homeowners have stopped paying rates to councils and even some utilities.

The mortgages continue to be paid but my small business person hears unconfirmed stories of banks realising they may not be able to evict, so they are offering payment reductions and deferrals.

It’s tiny at the moment but get ready for a lot more payment deferrals, particularly as we hit the middle of the year and the situation gets worse......

 

[peter2]

Looking for another trade opportunity in TWE. Minister for Trade just back from trip to China where there were discussions on the "bans" on many Aussie exports. Wine being the one of most interest to TWE.

May be tempted by price rallying over 13.40 for an initial parcel.

 

[Dona Ferentes]

yeah, but...

Aussie wines face fierce rivals in China comeback​

Chinese importers are confident Australian wine will be back on the shelves in the world’s largest consumer market by the end of the year, but warn sales are unlikely to return to the peak levels of four years ago.

Andy Xu, owner of Cellar Door Wines in Shanghai, said domestic Chinese wine and products from other countries had replaced Australian wine, which used to make up 100 per cent of his sales until steep tariffs were imposed in 2020.

“I think Australian wine coming back to China will eventually happen, but it will very much depend on Australian government policies towards China,” said Mr Xu.

“I don’t think Australian wine will get back to its peak status four years ago as its market share has been filled by wine products from other countries in the world, and particularly by Chinese domestic wine producers.”

His comments highlight the stark reality for Australian wine exporters, which are unlikely to repeat the $1.3 billion in sales to China achieved in 2019 before relations soured....

 

[JohnDe]

I’ve never taken my eye off of them, they’re a good company but there are questions.

 

[frugal.rock]

The wino's aren't happy, they've been drinking 4 litre casks of Cardboard le Chateau.
TWE heading to the abyss of delirium tremors...

 

[JohnDe]

The wino's aren't happy, they've been drinking 4 litre casks of Cardboard le Chateau.
TWE heading to the abyss of delirium tremors...

View attachment 158130

There’s so much wine available at the moment, prices are dropping almost daily as merchants try to move stock for the new vintage.

For those with a good cellar and time, you’re better of buying and storing for a few years.

 

[frugal.rock]

Aye, table grapes are a currently plentiful and quite cheap also.
Just wish I could find the Muscatel variety.

 

[finicky]

I'll be tracking down a couple of these after June 29. Pretty much given up alcohol but occasionally fall for what are probably marketing ploys. Might be another trick from the alcohol automaton within.

A South Australian winery can claim to make the best cabernet sauvingnon in the world after taking home gold in the International Wine Challenge 2023.

A glass or several of Riddoch Coonawarra’s The Pastoralist Cabernet Sauvignon 2021 won’t break the bank, either. They will be selling for $40 at Dan Murphy’s and BWS from June 29.

The full-bodied red wine competed against 20 other countries in the varietal’s category to win the trophy on Tuesday.

 

[Dona Ferentes]

If drinkers are feeling the impact of higher interest rates, Treasury Wine Estates chief executive Tim Ford says they’ve got a funny way of showing it. He’s seeing no signs that consumers are trading down to cheaper drops. Sales of plonk above $30 a bottle are growing in Australia, US and Asia and holding steady in Europe, while mid-market buyers – spending between $15 and $30 a bottle – are tending to drink less often, but buy more expensive wines when they do...

more on this thematic; a whip around of some managers :..

One manager suggested investors could buy one retailer that targets the wealthy’s discretionary spend.
“Treasury Wine Estates sells Penfolds and that’s over half its earning." “Its premium brands business sells to a broad range of international consumers.”

Treasury was also backed by Tribeca Investment Partners portfolio manager Jun Bei Liu as her top stock to back for growth at a Morgan Stanley investment conference in June, with a forecast for it to defy a general downturn and grow profits compounding at 15 per cent over the next 3 years.

UBS also rates Treasury a buy, with a $13.75 price target around 22 per cent higher than the market price of $11.22 on July 3.
“They’re expanding their distribution reach internationally and we think that works well." “They’ve reallocated product destined for China to other markets to take advantage of demand that was strong but unmet, and are growing incremental demand. With a focus on premium and luxury, we think some of their brands can actually do better."

 

[Dona Ferentes]

all the +ve guff isn't doing much for the SP ... not having a good 2023, and at 12 month lows.

.... wonder why they sold off water rights? Getting less exposure to MIA /flatland crops ?

 

[JohnDe]

all the +ve guff isn't doing much for the SP ... not having a good 2023, and at 12 month lows.
View attachment 159366

.... wonder why they sold off water rights? Getting less exposure to MIA /flatland crops ?
View attachment 159367

I reckon the SP has a bit more to fall.

 

[peter2]

I agree that TWE looks like it's been sold down irrationally ("oversold"). Maybe some insto's anticipate lower wine sales due to financial strain. TWE hasn't noticed any change in buying pattern yet.

TWE has sold some of it's lower quality vineyards after buying water rights to make them more attractive to sell. It's also shutting down a lower quality wine production facility.

Edit: No indication that China will reverse it's exorbitant wine tariff yet.

 

[dyna]

they've been drinking 4 litre casks of Cardboard le Chateau.

Now don't knock the good 'ole goon sack.
Even we sophisticates start out on the good stuff and switch to the plonk.
It's drinkable , after all ! Jeebus , imagine what you'd be paying if it was taxed like beer .

 

[eskys]

While the market goes red, TWE going north. Wonder whatsup

 

[Country Lad]

While the market goes red, TWE going north. Wonder whatsup

Probably a combination of the positive actions as described by @peter2 said above and hopeful about China trade with Albanese trip to take place.

 

[eskys]

You're back, Country Lad, welcome home.

The last time, I remember you posted a photo of a submerged building......I was over whelmed....too close to home, and went silent thereafter, felt bad about that.

That's good info to have...Albanese's trip, thank you.

Got me thinking....maybe PLS rise today ties in with the news.

Probably a combination of the positive actions as described by @peter2 said above and hopeful about China trade with Albanese trip to take place.

 

[finicky]

TWE chart developing well. Another small gain today not computed in this free weekly chart yet.
One of the tips recently from 'Market Matters' in their free webinair accessible on YouTube.
One thesis they have is that TWE has liberated itself from the yoke of China's CCP perfidy and reset itself for the premium brands market. Treasury can take or leave f'g China now.

https://youtube.com/@MarketMatters?si=ATSsXht2a83Y9VDT

Not Held

WEEKLY

 

[finicky]

Discussion of TWE comes in at 43.10 for anyone interested ..
Seems fully valued here to me?

 

[JohnDe]

TWE chart developing well. Another small gain today not computed in this free weekly chart yet.
One of the tips recently from 'Market Matters' in their free webinair accessible on YouTube.
One thesis they have is that TWE has liberated itself from the yoke of China's CCP perfidy and reset itself for the premium brands market. Treasury can take or leave f'g China now.

https://youtube.com/@MarketMatters?si=ATSsXht2a83Y9VDT

Not Held

WEEKLY
View attachment 163170

I have always liked TWE but luckily never invested because my attention came when they were at their peak, and then China high tariffs hit. Instead, I became a member of their Penfolds sales club and purchase a few of their offerings. Saying that, in the past several months there has been a huge push to sell Penfolds at nice discounts.

Is this a sign of a change in direction that shows an increase in sales and profits, or desperation to maintain sales?