Treasury Wine Estates is positioning itself to take a bigger share of the China market with a new strategy and a new wine.
The company has successfully moved from a high volume, mass appeal company to a seller of premium brands. The next step will take the wine maker to a higher price bracket in a booming market.
Growth in China’s middle class has been good for the Australian wine industry, with exports jumping 51% in the last year to $474 million, making it the top export market by value for the first time.
The positioning as a premium brand has worked for Treasury Wine. The company last month announced its half year results, more than doubling net profit after tax to $136.2 million.
And it has simplified its brands, putting them into three categories: the Penfolds range, including the iconic Grange; the Australian brands such as Wolf Blass and Lindeman’s; and the US stable of wines including Beringer and Stirling.
The company today revealed it was working on a fourth category, a French label that “breaks the traditional mold”.
A short time ago, Treasury Wine’s shares were up 2.9% to $12.48.
Here’s a slide from an investor day by Treasury Wine Estates:
Details are thin but Treasury Wine Estates says the French label will be launched in the first half of next year.
The brand, whose name is still a trade secret, is being developed with North Asia markets, mainly China — where a French label is a prestige item — in mind.
The top of the heap will be a Bordeaux Red Wine with a Cru Bourgeois classification and a target price RMB1,400, or about $AU270, a bottle.
Then a luxury label at RMB600, about $AU115, with a Bordeaux red wine, a Burgundy red, non vintage champagne and a Chateauneuf De Pape Red Wine.
A third tier would be priced at RMB300, about $A57, with a Bordeaux red, a Burgundy red, a non vintage sparkling and a rose.