Treasury Wine Estates said Hong Kong showed “pretty significant growth” in 2023 but rejected claims it was building stock there ready for potential trade with China.

Speaking to analysts following the group’s first-half results, CEO Tim Ford discussed January’s Wine Australia report that showed exports fell in volume and value terms in 2023 but the country reported an upturn in the final quarter, helped by sales in Hong Kong.

“Hong Kong has been a real bright spot for us actually, some really strong retail activations there,” he said.

“One of our key partners in the market there, one of the big retailers is going really well and winning in the market, and we’re actually winning within their business. And that’s underpinned by really strong joint business planning, consumer insight led activations and strong above-the-line marketing investments as well.”

The chief executive went on to dismiss any suggestions Treasury Wine Estates has “shipped ahead of a China reopening into a warehouse in Hong Kong”, adding it does not have any warehouses there.

“We’re not at the 70% plus of what the Wine Australia data said [Hong Kong grew 74% in export value to A$290m ($189m)], but we have pretty significant growth in that market from a depletions point of view, across Dairy Farm, across Park N Shop, across Watsons, across Jabsons, all our key customers in that market, and yeah, the activation has been outstanding.

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“So where Hong Kong has been a market for us, which we’ve struggled for a few years, we’ve certainly seen that as a bright spot, but I want to make sure it’s clear: We have not shipped ahead into our warehouse with a view that we can [sent it to China] – it is a potential positive tariff outcome that we just drop it over the border at the end of March,” Ford said.

He added that with borders “fully open now, there’s some interesting dynamics going on”.

Treasury Wine Estates slightly lowered its full-year guidance for its fiscal 2024, now estimating mid-to-high single-digit growth from a previous estimate of high single-digit growth.

When asked about the reasoning behind this change, Ford pinned it on the group’s Premium Brands business in Asia – its commercial-wines division.

He told analysts: “We’re pretty much where we need to be, other than the premium business in Asia, which we’ve highlighted and called out today. So that’s the shift that we need to get on top of and fix.

“The Asia business there has softened. Depletions have softened, and we need to balance our shipments to make sure we’re not building inventory. We will never just ship to hit a number. We’ve got to ship to a depletions plan and we’ve seen softness on the TPB brands in Asia.”

Ford touched on Treasury Wine Estates’ recent $900m deal to acquire Daou Vineyards and said the brand’s opportunity remained “very clear”.

“What we’ve learned in the last couple of months on Daou, was their R&D period was incredibly strong and they are continuing to outperform the category significantly and we’ve got a lot of runway to build distribution.

“We need to build the international business for Daou, not from scratch, but from a very small base. And we’ve got plans to really drive that.”

For the opening six months of its fiscal 2024, Treasury Wine Estates reported sales of A$1.313bn compared to A$1.308bn a year ago. Net income was A$166.7m, down 11.4%.

The group’s earnings before interest, tax, SGARA and material items (EBITS) dropped 5.8% to A$289.8m, driven by Treasury Americas and Treasury Premium Brands, which featured a 17.5% and 3.2% decline in EBITS respectively.

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