1 00:00:05,680 --> 00:00:09,000 Speaker 1: Welcome to the Fear and Greed Business Interview. I'm Sean Almam. Yesterday, 2 00:00:09,080 --> 00:00:11,959 Speaker 1: Treasury Wine Estates announced a big drop in its full 3 00:00:12,039 --> 00:00:14,840 Speaker 1: year profit, largely due to write downs on a number 4 00:00:14,840 --> 00:00:17,920 Speaker 1: of its cheaper brands. Those brands of Boof Plasts, Linderman's, 5 00:00:18,000 --> 00:00:21,840 Speaker 1: Yellow Glen and Blossom Hill are all set to be sold, 6 00:00:21,880 --> 00:00:25,400 Speaker 1: with Treasury focusing more on premium wine, led of course 7 00:00:25,400 --> 00:00:28,880 Speaker 1: by Penfoles, and an expanded luxury portfolio in the US. 8 00:00:29,240 --> 00:00:31,800 Speaker 1: This earning season, we're working with the team at osbiz 9 00:00:31,840 --> 00:00:33,920 Speaker 1: to bring you interviews with the leaders of some of 10 00:00:33,960 --> 00:00:38,040 Speaker 1: Australia's biggest companies. Osbiz is Australia's leading provider of live 11 00:00:38,080 --> 00:00:40,760 Speaker 1: and on demand video of the latest news in Australian 12 00:00:40,920 --> 00:00:44,520 Speaker 1: business markets, economy and startups. Sign up at osbiz dot 13 00:00:44,520 --> 00:00:45,160 Speaker 1: com dot au. 14 00:00:45,200 --> 00:00:45,760 Speaker 2: It's free. 15 00:00:45,960 --> 00:00:49,320 Speaker 1: Andrew Gagan spoke with Tim Ford, chief executive of Treasury 16 00:00:49,360 --> 00:00:52,360 Speaker 1: Wine Estates, about the results selling off the cheaper brands 17 00:00:52,400 --> 00:00:55,480 Speaker 1: and re establishing Penfoles within the Chinese market. 18 00:01:02,240 --> 00:01:05,560 Speaker 3: Well, Tim Forward, welcome to osbiz, thanks for joining us 19 00:01:05,600 --> 00:01:09,600 Speaker 3: post your results. Congratulations on that. Let's first go to 20 00:01:09,840 --> 00:01:13,480 Speaker 3: those numbers. Profit down sixty one percent? 21 00:01:13,520 --> 00:01:17,560 Speaker 4: What is that attributable to the statutory net profit down 22 00:01:18,040 --> 00:01:21,200 Speaker 4: one percent based on a non cash impairment we announced 23 00:01:21,200 --> 00:01:24,920 Speaker 4: to the market last week for our Treasury premium brands 24 00:01:24,920 --> 00:01:28,000 Speaker 4: business could will and some brands, some commercial brands and that. 25 00:01:28,160 --> 00:01:30,680 Speaker 2: So that's been the biggest driver of that. 26 00:01:31,480 --> 00:01:35,000 Speaker 4: When you when you look at impact excluding that that 27 00:01:35,080 --> 00:01:38,880 Speaker 4: non cash impairment, we're up about eight percent overall. 28 00:01:39,040 --> 00:01:40,480 Speaker 3: How do you look at the result? How would you 29 00:01:40,480 --> 00:01:40,959 Speaker 3: sign it up? 30 00:01:41,600 --> 00:01:44,480 Speaker 2: Well, I think it's a proof of our strategy working. 31 00:01:44,760 --> 00:01:47,160 Speaker 4: Is the way I summon it up to have you know, 32 00:01:47,200 --> 00:01:50,840 Speaker 4: both pen folds and out our Treasury America's business delivering 33 00:01:51,480 --> 00:01:53,880 Speaker 4: one billion dollar net sales revenue top line for the 34 00:01:53,880 --> 00:01:58,520 Speaker 4: first time. It's fantastic, and particularly Treasury America is driven 35 00:01:58,520 --> 00:02:02,160 Speaker 4: by its Luxury one portfolio, which is clearly the strategy 36 00:02:02,160 --> 00:02:05,360 Speaker 4: we've invested behind based on recent acquisitions and the focus 37 00:02:05,360 --> 00:02:09,160 Speaker 4: of the business. So very very pleased that the strategy 38 00:02:09,200 --> 00:02:11,200 Speaker 4: we've been working on is now coming to life through 39 00:02:11,240 --> 00:02:13,639 Speaker 4: our financial performance and we've got some good momentum. 40 00:02:14,560 --> 00:02:16,800 Speaker 3: So as soon as you're outlined there very much the 41 00:02:16,800 --> 00:02:20,560 Speaker 3: focus now on that global premium model in the wake 42 00:02:20,680 --> 00:02:25,799 Speaker 3: of your strategic review, So is that the focus now 43 00:02:25,840 --> 00:02:29,160 Speaker 3: for the business. What happens to those cheaper brands if you. 44 00:02:29,280 --> 00:02:31,000 Speaker 2: Like, Yeah, definitely. 45 00:02:31,040 --> 00:02:34,680 Speaker 4: Look, our business now is nearly eighty percent of our 46 00:02:34,720 --> 00:02:36,960 Speaker 4: earnings comes from what we can luxury wine, which are 47 00:02:36,960 --> 00:02:39,840 Speaker 4: Australian dollars is thirty dollars and above. So it's been 48 00:02:39,880 --> 00:02:42,239 Speaker 4: a very big shift in our business globally over the 49 00:02:42,320 --> 00:02:45,720 Speaker 4: last couple of years, and clearly high margin will certainty 50 00:02:45,760 --> 00:02:48,320 Speaker 4: of earnings, more consistent growth you see in that category. 51 00:02:48,760 --> 00:02:50,960 Speaker 4: And as part of that, you know, we still have 52 00:02:51,000 --> 00:02:53,600 Speaker 4: a few commercial wine brands below ten dollar brands in 53 00:02:53,639 --> 00:02:56,920 Speaker 4: our business today, and we've announced as part of this 54 00:02:57,000 --> 00:03:00,480 Speaker 4: results that we will also be divesting number of those 55 00:03:00,639 --> 00:03:03,960 Speaker 4: large scale but low margin commercial wine brands over the 56 00:03:04,000 --> 00:03:06,919 Speaker 4: course of fiscal twenty five, which will continue our drive 57 00:03:07,000 --> 00:03:09,280 Speaker 4: towards increasing the margin and improving the mix of our 58 00:03:09,320 --> 00:03:10,840 Speaker 4: business and the quality of our earnings. 59 00:03:11,440 --> 00:03:14,320 Speaker 3: So divesting some of those brands, there's some speculation you 60 00:03:14,400 --> 00:03:19,600 Speaker 3: may spin off that the cheaper brands if you like, 61 00:03:20,160 --> 00:03:21,320 Speaker 3: you're willing to comment on that. 62 00:03:22,840 --> 00:03:26,080 Speaker 4: I mean, we announced also today that we will bring 63 00:03:26,160 --> 00:03:30,240 Speaker 4: together our Treasury Premium brand's division with the similar brand 64 00:03:30,240 --> 00:03:33,360 Speaker 4: portfolio out of our America's division into into one team 65 00:03:33,880 --> 00:03:35,560 Speaker 4: by the end of this fiscal year, and that does 66 00:03:35,680 --> 00:03:39,320 Speaker 4: enable us optionality to create value going forward if that's 67 00:03:39,360 --> 00:03:40,320 Speaker 4: the decision we make. 68 00:03:40,440 --> 00:03:44,320 Speaker 2: But you know, the first two decisions with an ounce today. 69 00:03:44,600 --> 00:03:46,920 Speaker 4: Is the divestment of that low end portfolio, which I 70 00:03:46,920 --> 00:03:49,520 Speaker 4: think is important for us, and also the creation of 71 00:03:49,520 --> 00:03:51,160 Speaker 4: this new global premium structure. 72 00:03:51,480 --> 00:03:54,200 Speaker 2: It will unlock optionality in the future, but right now 73 00:03:54,600 --> 00:03:56,600 Speaker 2: we have to improve the performance of that business as 74 00:03:56,600 --> 00:03:59,720 Speaker 2: well as the supporting role to our luxury strategy. 75 00:04:00,320 --> 00:04:04,200 Speaker 3: Tim Howard, you describe the success of your acquisition of 76 00:04:04,360 --> 00:04:07,240 Speaker 3: Dow and it's integration, how it's performing at the moment. 77 00:04:07,960 --> 00:04:11,680 Speaker 4: Look at the brand continues to perform very, very well 78 00:04:12,000 --> 00:04:14,520 Speaker 4: in the market in the United States, so that's it's 79 00:04:14,520 --> 00:04:17,719 Speaker 4: always pleasing enough to particularly such a sizeable acquisition that 80 00:04:18,240 --> 00:04:20,120 Speaker 4: you know, it's delivering to its plan that we outlined 81 00:04:20,200 --> 00:04:23,040 Speaker 4: for for the first six months of ownership, so you know, 82 00:04:23,160 --> 00:04:24,320 Speaker 4: that's that's good news. 83 00:04:24,320 --> 00:04:27,360 Speaker 2: And the momentum behind the brand is there as well, 84 00:04:27,360 --> 00:04:28,039 Speaker 2: which is great. 85 00:04:28,480 --> 00:04:32,080 Speaker 4: Integration wise, you know, we're in execution mode now, so 86 00:04:32,120 --> 00:04:34,800 Speaker 4: it's always nice to move from planning into execution for 87 00:04:34,839 --> 00:04:38,080 Speaker 4: these these activities as well, so you know, synergies are 88 00:04:38,120 --> 00:04:41,000 Speaker 4: well and truly on track, team structures in place, and 89 00:04:41,040 --> 00:04:44,680 Speaker 4: it's about execution now in FI twenty five, so we're 90 00:04:44,720 --> 00:04:47,360 Speaker 4: really pleased with how that's come together, and the team 91 00:04:47,400 --> 00:04:49,520 Speaker 4: in the US have just done a fabulous job combining 92 00:04:49,520 --> 00:04:51,240 Speaker 4: both in the last twelve months. 93 00:04:52,000 --> 00:04:54,400 Speaker 3: Any other acquisitions on the table, are you keeping your 94 00:04:54,440 --> 00:04:55,360 Speaker 3: options open. 95 00:04:57,200 --> 00:04:57,719 Speaker 2: Right now? 96 00:04:57,760 --> 00:05:00,640 Speaker 4: We've got our We've got our focus on delivering on 97 00:05:00,720 --> 00:05:03,479 Speaker 4: the business cases for the acquisistion we've made, so I 98 00:05:03,480 --> 00:05:06,480 Speaker 4: think you know that plus the opportunity clearly with pen 99 00:05:06,560 --> 00:05:09,640 Speaker 4: folds globally, you know, with the reopening of China, that's 100 00:05:09,400 --> 00:05:12,239 Speaker 4: a that's a really focused plan for us to deliver 101 00:05:12,320 --> 00:05:14,799 Speaker 4: what is fantastic growth over the next couple of years. 102 00:05:14,839 --> 00:05:17,799 Speaker 4: So I don't see us acquiring new brands will always 103 00:05:17,880 --> 00:05:20,240 Speaker 4: be on the look at so in the near future, 104 00:05:20,279 --> 00:05:23,919 Speaker 4: in particular in the longer term, you know, clearly we'd 105 00:05:24,000 --> 00:05:25,839 Speaker 4: start looking at that again once we've delivered on the 106 00:05:25,880 --> 00:05:26,479 Speaker 4: current ones. 107 00:05:27,000 --> 00:05:28,520 Speaker 2: But that being said, you know. 108 00:05:28,480 --> 00:05:31,839 Speaker 4: From a supply point of view, vineyards, you know, assets 109 00:05:31,880 --> 00:05:34,320 Speaker 4: around the globe that support the growth of our luxury 110 00:05:34,360 --> 00:05:37,080 Speaker 4: wine business. We're continuing looking at that, but from a 111 00:05:37,120 --> 00:05:38,760 Speaker 4: brand point of view, I think we've got a pretty 112 00:05:38,760 --> 00:05:39,880 Speaker 4: good portfolio right now. 113 00:05:40,920 --> 00:05:44,640 Speaker 3: Tim, you mentioned China obviously following the removal of those 114 00:05:44,680 --> 00:05:49,320 Speaker 3: tariffs on austral and wine inputs into China. What's your strategy, 115 00:05:49,360 --> 00:05:50,719 Speaker 3: How are you rebuilding that business? 116 00:05:52,200 --> 00:05:54,960 Speaker 4: Yeah, look, it's about three months back into it now, 117 00:05:54,960 --> 00:05:58,200 Speaker 4: and you know, we've kept our distribution model. We've kept 118 00:05:58,200 --> 00:06:01,520 Speaker 4: our team in China throughout the the tariff period of 119 00:06:01,600 --> 00:06:05,400 Speaker 4: time by selling out our French, our American pen Folds 120 00:06:05,520 --> 00:06:08,279 Speaker 4: and other brands as well as most recently a Chinese 121 00:06:08,279 --> 00:06:11,520 Speaker 4: source pen Folds as well, so we've maintained the relationships. 122 00:06:11,520 --> 00:06:14,240 Speaker 4: So for us, it's certainly not starting from scratch, so 123 00:06:14,480 --> 00:06:16,880 Speaker 4: it's re establishing that portfolio. 124 00:06:16,360 --> 00:06:19,760 Speaker 2: And the products in market. The distribution is. 125 00:06:19,680 --> 00:06:23,960 Speaker 4: Certainly going at great pace and customers are starting to 126 00:06:23,960 --> 00:06:27,839 Speaker 4: re order after their initial orders from the tariff removal. 127 00:06:27,960 --> 00:06:30,360 Speaker 4: So yeah, it's a pretty exciting time. I mean, number 128 00:06:30,400 --> 00:06:32,960 Speaker 4: one brand from a brand awareness point of view, pen 129 00:06:33,000 --> 00:06:35,320 Speaker 4: Folds is still the number one luxury one brand in 130 00:06:35,400 --> 00:06:38,840 Speaker 4: China even though we really haven't been there for much 131 00:06:38,839 --> 00:06:40,560 Speaker 4: of the last three years in a meaningful way. 132 00:06:40,680 --> 00:06:42,680 Speaker 2: So yeah, we've got the platform ready to go. 133 00:06:43,120 --> 00:06:46,080 Speaker 3: All right, that's that brand recognition, which is obviously hardening 134 00:06:46,120 --> 00:06:48,040 Speaker 3: for you. Tim. What's your guidance? 135 00:06:48,080 --> 00:06:48,839 Speaker 2: What have you provided? 136 00:06:50,240 --> 00:06:53,560 Speaker 4: We've guided to earnings in fiscal twenty five seven hundred 137 00:06:53,560 --> 00:06:56,359 Speaker 4: and eighty million to eight hundred and ten million, which 138 00:06:56,600 --> 00:06:58,520 Speaker 4: on the back of six fifty eight this year is 139 00:06:58,520 --> 00:07:01,599 Speaker 4: a significant growth. Now that fcludes a full year of 140 00:07:01,640 --> 00:07:04,880 Speaker 4: the Dow earnings in the Treasury Americas, but that'll be 141 00:07:04,960 --> 00:07:08,320 Speaker 4: driven by our luxury portfolio pen folds and within the 142 00:07:08,360 --> 00:07:12,120 Speaker 4: America's business supported by premium which which we believe it 143 00:07:12,120 --> 00:07:14,480 Speaker 4: will be broadly flat year on years. 144 00:07:14,480 --> 00:07:16,040 Speaker 2: So we've got a strong year ahead of us. 145 00:07:16,560 --> 00:07:18,600 Speaker 3: And what do you make of the economy? And I 146 00:07:18,640 --> 00:07:20,640 Speaker 3: guess how the consumers traveling at the moment? I guess 147 00:07:20,720 --> 00:07:24,000 Speaker 3: particularly you know, with the issues at that lower end 148 00:07:24,240 --> 00:07:28,840 Speaker 3: of the market. As the average consumer deals with those 149 00:07:28,880 --> 00:07:30,120 Speaker 3: cost of living issues. 150 00:07:30,560 --> 00:07:32,560 Speaker 2: It's challenging at the lower end of the market. 151 00:07:32,600 --> 00:07:35,160 Speaker 4: There's a real bifurcation of the category, you know, within 152 00:07:35,240 --> 00:07:38,120 Speaker 4: one and there is the number of categories. And I 153 00:07:38,200 --> 00:07:42,160 Speaker 4: guess fortunately we've shifted our business more towards the luxury 154 00:07:42,160 --> 00:07:44,560 Speaker 4: price points significantly over the last couple of years, and 155 00:07:44,560 --> 00:07:48,600 Speaker 4: that's remaining very strong in terms of so so yeah, 156 00:07:48,800 --> 00:07:51,200 Speaker 4: that's right around the world. It's actually quite consistent in 157 00:07:51,200 --> 00:07:53,760 Speaker 4: all markets around the world, whereas if I use in 158 00:07:53,800 --> 00:07:57,120 Speaker 4: Australia for example, you know below fifteen dollars has certainly challenged, 159 00:07:57,760 --> 00:08:00,640 Speaker 4: so the cost of living pressures are really there. But 160 00:08:00,920 --> 00:08:04,120 Speaker 4: in saying that every consumer around the world, wine consumer 161 00:08:04,160 --> 00:08:07,239 Speaker 4: around the world is drinking less but drinking better priced wines, 162 00:08:07,560 --> 00:08:10,320 Speaker 4: you know, that's a that's a trend. That's I would say, 163 00:08:10,320 --> 00:08:12,120 Speaker 4: it's not even a trend. It's just going to continue 164 00:08:12,120 --> 00:08:14,600 Speaker 4: to happen, you know, as as the health and wellness 165 00:08:14,600 --> 00:08:17,920 Speaker 4: conscious consumer continues, so you know, shifting up price points 166 00:08:18,000 --> 00:08:19,720 Speaker 4: is crucial for us. 167 00:08:26,240 --> 00:08:28,920 Speaker 1: That was Tim fod, chief executive of Treasury Wine Estates, 168 00:08:29,040 --> 00:08:32,520 Speaker 1: speaking to Andrew Gaigan from Osby's sign up at osbiz 169 00:08:32,559 --> 00:08:35,160 Speaker 1: dot com dot au. It's free. This is the Fear 170 00:08:35,160 --> 00:08:37,240 Speaker 1: and Greed Daily Interview. Joined us every morning for the 171 00:08:37,240 --> 00:08:39,760 Speaker 1: full episode of Fear and Greed Daily Business years for 172 00:08:39,880 --> 00:08:42,960 Speaker 1: people who make their own decisions. I'm Sean Elmer. Enjoy 173 00:08:43,000 --> 00:08:44,760 Speaker 1: your day.