Treasury Wine Estates has revealed it’s entering the beer business and negotiating to acquire two French vineyards as it expands its reach in the US and China.
The brewing announcement marks a return to the fold for TWE, which was spun out of Foster’s Group eight years ago.
The hugely popular 19 Crimes wine brand is poised to launch three craft beers in the US in March — an American India pale ale, a pilsner and a lager.
The beers will be tested in Ohio initially and, if successful, will expand to more states in the US.
An 1869 Irish whiskey is also in the works, with a July launch planned.
TWE CEO Michael Clarke noted during an earnings call today that “the spirits components from 19 Crimes is going to be big and profitable”.
The Irish whiskey segment is booming, with sustained double digit sales growth. The industry had another record year of export growth in 2018 with the value of exports increasing by €45 million to €623 million.
The 19 Crimes label had been the fastest-growing wine brand in the US over the past three years. It’s in its sixth year of “phenomenal growth” in the US, with dollar sales increasing by over 70% in the past year.
The decision to broaden the brand into beer and spirits was prompted by liquor retailers asking for 19 Cimes to be expanded to include other beverages.
French wineries on the shopping list
Meanwhile, Clarke revealed that the company is poised to acquire up to two small wineries in France along with premium vineyards to assist in its push into China.
“We’re in dialogue with two to three parties,” Clarke said.
TWE plans to launch a portfolio of three French-made wines, one of which will be branded Penfolds. The other two French wines will be part of the existing Maison de Grand Esprit and a French version of its Californian premium brand Beaulieu Vineyard.
Previously, the Maison de Grand Esprit brand used wine sourced from external vineyards.
“In order to really have a serious platform that we can grow our French portfolio from, we don’t want to use other people’s infrastructure to do everything,” Clarke said. “We want our infrastructure, we want a permanent team on the ground and the beauty is you can also have visiting winemakers, especially from Australia, going to France because it’s contra season obviously, for two different vintages.”
Clarke added that the French wine category makes up 30-40% of the total wine market in China and the company is keen to secure a larger piece of the action.
“The French category, in particular, is one where we see huge opportunity to win share,” he noted.
TWE announced this morning that its net sales revenue is up 16% to $1,507.7million, representing the largest organic growth rate in the company’s history. Overall, the Asian region was the standout performer, with EBITS growth up 31% to $153.1 million.
French brand portfolio net sales revenue in Asia was up 111%.
“The fundamentals of the Asian wine market as a whole remain enormously attractive, and we are not seeing a slowdown in demand for our brands,” Clarke said.
“We also see tremendous opportunity to expand our penetration into more cities and across more partners in China. We have an ambition to expand our presence and availability by more than 50% in the next three years.”