Chinese Are Really Enjoying Their Wine: Treasury CEO
Writer for CNBC.com
The world's second largest wine company Treasury Wine Estates sees the strong Aussie dollar as a headwind, but has hit a sweet spot in China, its CEO David Dearie told CNBC.
The Australia-headquartered company, a spinoff from Fosters Group, reported a net profit of A$52.3 million ($53.3 million) over July to December 2012, the first six months of its financial year, which is a 30.8 percent improvement on the previous year.
The company attributed the growth to continued global demand for premium wines, which he argued was recession proof.
Historically, wine has been popular in Western economies, but according to Dearie, Asia, and particularly China, is showing increased appetite for premium wines. He said Penfolds and Wolf Blass premium brands were proving especially popular in China.
"What we're seeing is the Asian consumer, particularly China, really enjoying their red wine. They are very brand conscious and are looking for a brand with heritage and quality. We are forecasting a lot of growth for China and Asia," he said.
But CEO David Dearie said the strength of the Aussie dollar, trading at around 1.2 to the U.S. dollar on Tuesday morning, was a headwind to the company's growth.
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"We are managing the business on the assumption that the [Aussie] dollar remains high, but ideally as a large export business we'd like the dollar lower so we can boost profits as we export internationally," said Dearie.
The Aussie dollar has strengthened over 5 percent against the greenback since June last year, making conditions tough for the country's export led economy.
Not for Sale
The CEO rebuffed questions over a possible takeover of the firm, with a talked of price tag of A$4 billion, according to media reports.
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"Our focus is on building the brands in our portfolio. Right now that's the only thing taking our time and attention," he said.
Treasury Wines operates a number of high profile premium brands including Lindemans, Penfolds, Rosemount, Saltram, Wolf Ball and Yellowglen.