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Treasury Wine Estates on M&A hunt as CEO targets US, Asia

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Treasury Wine Estates CEO Michael Clarke has promised more vineyard and winery acquisitions as his company bucks sluggish trends in the US and aims to become China's biggest supplier of French wine.

TWE has rebounded in the US by building up premium brands such as Beringer Brothers

TWE has rebounded in the US by building up premium brands such as Beringer Brothers

Speaking exclusively to just-drinks yesterday, Clarke said he is keen to follow the recent purchase of TWE's first assets in Bordeaux with more M&A. "This is our first acquisition, it will not be our last," Clarke said.

The CEO also said TWE will sweep up cut-price vineyards in the US, where companies such as Constellation Brands are selling of wine assets because of challenges at the lower-value end.

"Over time, we could be in an acquirer of other people's wine businesses," Clarke said. "But it will be when they have been weakened and therefore at a lower price."

TWE has overhauled its distribution model in the US after nearly crashing out of the country only a few years ago. In 2014, the company was forced to take a US$240m write-down in the US. Reports at the time said both Pernod Ricard and Constellation Brands were mulling a purchase of TWE's US assets. 

Since Clarke took over as CEO in 2014, TWE has seen a turnaround in its US fortunes by targeting higher-value brands such as Penfolds, 19 Crimes and Beringer Brothers. In full-year results released yesterday, TWE's Americas sales were up 9% organically. The company added 1.6 percentage points to its EBIT margin in the region.

Clarke said the overhaul has set the company up to attack US rivals. "Historically, the US has not been a happy geography for us. Now that we've fixed the US, we can start to get the country delivering and take share from our competitors there."

Asia - now TWE's biggest reporting region - also performed well in H1 as TWE continued to ramp up Australian brands in China. The performance of brands such as Penfolds has made Australian sales in China key to TWE's recent growth. Clarke said he now aims to do the same with French wine.

Speaking about the importance of the Bordeaux acquisition, Clarke said: "Our ambition now is to be the number one importer of French wine into Asia. We're already the number one importer of wine with a small share into Asia - we're now going after number one for French wine."

Meanwhile, Clarke told just-drinks the company is testing a 19 Crimes beer in Ohio and even considered launching a whiskey under the brand. However, Clarke said the plan was halted.

"We decided to stop it because we thought it might distract us," the CEO said.

To read the full interview with Clarke, click here.


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