Treasury Wine Estates Limited · ASX:TWE
Treasury Wine Estates — Investor Day (May 2021)
63 slides from Treasury Wine Estates's investor day presentation, May 13, 2021
Slide 1: Treasury Premium Brands
Treasury Premium Brands Peter Neilson
Slide 2: Vision
Treasury Premium brands Vision The world’s most inventive branded wine business, bringing the pleasure of premium wine to more people on more occasions 2
Slide 3: Treasury Premium Brands snapshot
Treasury Premium Brands snapshot 60+ 18m countries cases Market 12 priority leadership2 brands #1 Australia #1 Singapore 7 wineries #2 Hong Kong 41 vineyards 1 #2 Nordics #4 UK 1 Owned and leased vineyards 3 2 IWSR 2020, still wine, value share, Asia imported wine only 3
Slide 4: An enviable premium wine business with significant opportunity
An enviable premium wine business with significant opportunity Global footprint with Diverse and iconic Innovation Leading winemaking strong positions in key portfolio of premium capability based capability and asset base markets and established brands, meeting on global insights supporting a divers
Slide 5: Global consumer trends
Global Consumers are turning to new emerging varietals1 consumer trends Dollars growth % YA 24.8 26.1 18.6 The five category growth drivers are influencing consumer trends in our priority markets 10.4 Traditional varietals Emerging varietals AUS UK Discovery Refreshing Step Up Conscious Comfort soci
Slide 6: Our key global markets
Our key global markets Consumers are premiumising across our core and priority growth markets1 Core markets – Australia and UK Growth market example - Asia Market AU: 54m 9le AU: $8bn 99m 9le $25bn dimensions UK: 127m 9le UK: $24bn 120 160 110 140 100 Category & 120 90 premiumisation trends 80 100 (
Slide 7: Priority portfolio hierarchy
Priority portfolio hierarchy Trusted brands catering to a diverse range of consumer needs and occasions, sourced from Luxury the world’s most renowned wine regions $30 Premium $10 Commercial 7
Slide 8: Strategic growth drivers
Strategic growth drivers Expansion of premium focused, consumer centric and innovation-led portfolio Accelerate in priority growth markets and channels Expand global, multi-COO sourcing footprint Implement fit for purpose cost and capital base 8
Slide 9: Expansion of premium focused portfolio
Expansion of premium focused portfolio Accelerate consumer-led innovation and portfolio expansion Grow premium offerings, focused on $10-30 price points Build the global presence of key focus brands Develop a differentiated portfolio of emerging and growth varietals 9
Slide 10: Expand a consumer-centric portfolio
Expand a consumer-centric portfolio Growing priority brands into global icons Global strategic growth engines Building a differentiated portfolio of emerging growth varietals New Pepperjack varietals The #1 malbec and fastest 19 Crimes growing grenache in the Australian market2 150% growth in F211,
Slide 11: Unlocking our sleeping giants
Unlocking our sleeping giants 11
Slide 12: Innovation focused on consumer trends
Squealing Pig Innovation focused Building consumer engagement and innovating to drive new occasions on consumer trends Harness insights to identify consumer needs Drive technology led consumer engagement Develop offering to address growing health and wellness trends Wolf Blass ‘Zero’ range launching
Slide 13: Accelerate in priority growth markets and channels
Accelerate in priority growth markets and channels Diversify and grow sales regions beyond core markets Drive channel diversification in all markets COO expansion an opportunity to grow addressable market and consumer base 13
Slide 14: COO expansion
COO expansion An opportunity to access more consumers Retail sales value by COO – priority markets1 2% 4% 2% By expanding our 9% 15% 14% 15% 20% 26% 24% existing portfolio to 33% 38% include new COO 33% offerings, there is an 48% 55% opportunity to access 38% 98% more consumers in our 89% 61% 66% 77
Slide 15: Fit-for-purpose cost and capital base
Fit-for-purpose cost and capital base Relentless focus on cost and asset optimisation to drive improved margin and ROCE Right-size asset base and improve asset utilization Maintain a lean and efficient cost base Improve returns on commercial investments through strategic portfolio focus Grow profita
Slide 16: Key Financials
Key Financials Historical performance1 Financial priorities F18 F19 F20 Premiumise sales mix Volume (m9LE) 18.9 18.8 17.6 Reshape portfolio, focused on growing NSR (A$m) 949.2 931.2 869.7 premium and luxury offerings NSR/Case (A$) 50.2 49.6 49.4 EBITS (A$m) 163.6 137.9 78.4 Grow EBITS EBITS margin (
Slide 17: In summary
In Insummary summary Treasury Premium Brands is a Treasury Premium Brands is a global business with significant global business with significant opportunity opportunity Premium focused portfolio Premium focused portfolio expansion and consumer-led expansion and consumer-led innovation will be the dr
Slide 18: Supply
TREASURY WINE ESTATES Supply Kerrin Petty
Slide 19: Vision
Supply Vision To be the partner of choice for our divisions, customers and suppliers 19
Slide 20: Supply strategic imperatives
Supply strategic imperatives Destination zero harm Optimise cost and Expand global Customer-centric asset base sourcing footprint Sustainable & innovative Treasury Treasury Premium Brands Americas 20
Slide 21: A world class supply chain model
A world class supply chain model Global, multi-regional asset base that supports growth and diversifies vintage variation risk Australia United States New Zealand 71 42 9 vineyards vineyards vineyards 8,676 3,213 498 planted hectares planted hectares planted hectares 8 7 1 wineries wineries winery F
Slide 22: Optimising our cost and asset base
Optimising our cost and asset base Ongoing areas of focus Supply chain optimisation program Gain incremental access to luxury supply Implement product strategy optimisation Vineyard yield optimisation Maximise winery and packaging network efficiency Driving uplift in grade conversion Rationalise sou
Slide 23: Expanding our global sourcing footprint
Expanding our global sourcing footprint Building a global sourcing model to support divisional portfolio priorities France Italy New Zealand Other regions Strategy Grow Optimise Optimise Grow TWE controlled vineyard and Optimise TWE-owned asset base, Fit for purpose asset base Access to an expanded
Slide 24: Sustainable and innovative viticulture
Sustainable and innovative viticulture Leveraging technology to drive excellence in viticulture AgTech Machine learning to predict yield, Robotic tractors solutions harvest timing and fruit quality Climate Viticulture Automation Adaptability Digitisation Propagation, climate modelling, Data based de
Slide 25: Sustainable and innovative winemaking
Sustainable and innovative winemaking Efficiency and optimisation of Winery production Automated cellar of the future Automated tankfarm with the capability of complete control of wine movements in tank Highly efficient packaging line to process over 100 bottle types and over 50 carton formats Autom
Slide 26: Consumer centric innovation
Consumer centric innovation Supporting our divisions to meet emerging consumer trends Building low and no-alcohol production technology Pioneering new packaging materials and formats focused on sustainability, convenience and experience Developing new wine at home dispensing and technologies Wolf Bl
Slide 27: World Class talent
World Class talent Katie Hodgson
Slide 28: Our DNA forms our cultural code
Our DNA forms our cultural code 28
Slide 29: Investing in our greatest asset, our people
Investing in our greatest asset, our people Events and programs that Resources and initiatives to Development tools and enable your whole self to flourish, improve your health and programs to make a real impact an that build inclusion and resilience belonging with our communities OUR INVESTMENT IN Y
Slide 30: Cultivating a culture of inclusion to leverage the power of diversity
Cultivating a culture of inclusion to leverage the power of diversity A diverse global team % global workforce by geography Australia & New Zealand Americas Asia Europe 53% 31% 10% 6% 39.8% 60.2% 44.4% Focused on growing 41.2% Committed to 50% gender diversity in 39.0% 37.3% 37.1% 35.9% leadership 3
Slide 31: Investing in employee engagement
Investing in employee engagement TWE has increased its tools to listen to employees Engagement score COVID-19 Pulse Survey Favorable Neutral Unfavorable 68 21 11 Engagement Inclusion WhaT’WE Think score Survey Survey #2 manufacturing and consumer goods 2021 31
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Slide 33: Towards a sustainable future
Towards a sustainable future Kirsten Gray Kerrin Petty
Slide 34: Cultivating a brighter future
1 Building a resilient business Cultivating a 2 Fostering healthy and brighter future inclusive communities 3 Producing sustainable wine 34
Slide 35: Leading by example
Leading by example We are developing an expanded suite of targets and commitments that demonstrate we will lead by example Health, safety • Destination Zero Harm & Wellbeing • Comprehensive review of TWEs water footprint and usage at a catchment level Water stewardship • Enhance our water strategy t
Slide 36: Leading by example
Leading by example We are developing an expanded suite of targets and commitments that demonstrate we will lead by example • 100% of product packaging to be recyclable, reusable, or compostable by 2022 Sustainable packaging • 100% of product packaging to comprise 50% recycled content by 2025 and cir
Slide 37: Taking action on climate change
Taking action on climate change We support the Paris Climate Agreement objectives and will prioritise the delivery of key targets Setting emissions Building resilience into our operations reduction targets • We are undertaking a global climate scenario • 100% renewable electricity by 2024 analysis t
Slide 38: Case Study: TWE Barossa Packaging and Winery
Case Study: TWE Barossa Packaging and Winery A state-of-the-art luxury winemaking facility designed with long term sustainability in mind Impacting Less Adapting More • Reduced CO2e by 5% • Renewable energy to account for • Waste to landfill minimisation up to 50% of site electricity needs • Recycli
Slide 39: Case Study: Global packaging guidelines
Case Study: Global packaging guidelines Innovating our packaging to deliver a positive impact on the resource and energy efficiency of our supply partners Glass | Labels | Screwcaps | Capsules Expected benefits to be delivered by F231: Materials reduction 3,500 tons CO2e emissions reduction 3,200 to
Slide 40: A roadmap for maturing our approach
A roadmap for maturing our approach F21-22 F23-24 F24-25+ Phase 1 Phase 2 Phase 3 Focus & Momentum Accelerate Agenda Integration • Ambition, goals & targets defined • Disciplined execution of • Sustainability leadership in • Materiality assessment roadmaps collaboration with completed • Enhanced dis
Slide 41: Technology as a platform for growth
Technology as a platform for growth Matt Young
Slide 42: Disruption is coming to wine
Disruption is coming to wine “Old world” winemaking “Consumer experience?” 360 Connected New business Data engagement brands models & insights 42
Slide 43: Technology as an advantage
Technology as an advantage Capture share of growing Increased channels Provide consumer personalised engagement access and unique with our brands experiences Consumer Become the partner of choice connection and Production for customers experience efficiency and suppliers Safety and Focus people Simp
Slide 44: Key investment priorities
Key investment priorities Virtual experiences Future collaborations Tech in bottle Partner Luxury clubs e-commerce sites Artificial Barrel & asset intelligence Augmented TWE e-commerce management reality investment South Australia expansion Collaboration Laser guided vehicles Robotics Promotional ef
Slide 45: Technology investment profile
Technology investment profile Prioritising incremental technology investment - up to 25% of total annual capital expenditure By category Increasing the weighting of technology investment for winemaking and consumer facing priorities 30% 34% 40% Historic 49% Future To drive benefits of • Lower COGS a
Slide 46: Our long-term growth
Our long-term growth Matt Young
Slide 47: Our shareholder value proposition
Our shareholder value proposition Delivering sustainable long term growth for our shareholders Global Platform Ongoing pursuit of long- Disciplined and strategic Deliver attractive returns and Strategy term financial ambitions approach to capital allocation through the cycle Grow premium mix Maintai
Slide 48: Our long-term growth objectives
Ongoing pursuit of long term financial ambitions Our long-term growth objectives Deliver sustainable top-line growth and high-single digit average earnings growth over the long-term1 Sustainable growth, profitability and efficient capital utilisation Premiumise Deliver EBITS Restore and grow our sal
Slide 49: Enablers of our long-term growth objectives
Ongoing pursuit of long term financial ambitions Enablers of our long-term growth objectives F21 F22 F23 F24 F25 Long-term margin targets Category premiumisation New operating model 25%+ Global COVID-19 recovery Technology investment Luxury reallocation California French Penfolds launch launch 40-45
Slide 50: Australian wine production
Ongoing pursuit of long term financial ambitions Australian wine production In 2019, Australia produced 1.2bn litres of wine1 China exports Other export 11% of Australian wine markets production was exported to China 52% of Australian production was Domestic consumption exported to markets outside o
Slide 51: Supply and demand dynamics for Australian wine
Ongoing pursuit of long term financial ambitions Supply and demand dynamics for Australian wine Australia was in a position of under-supply Export markets for Australian wine have been growing significantly in going into vintage 20211 2020/20213 Total Australian exports (excl China) +8% UK US Canada
Slide 52: We are well placed to manage through impacts
Ongoing pursuit of long term financial ambitions We are well placed to manage through impacts • Global Bins and Icons expansion strategy underway • Immaterial cost to carry inventories into future years • Flexible sourcing model Luxury & Premium TWE largely retained it’s V21 luxury and premium intak
Slide 53: Benchmarking divisional targets
Ongoing pursuit of long term financial ambitions Benchmarking divisional targets Five year peer group EBITS margin performance1 vs. divisional margin targets Treasury Premium Brands Treasury Americas Penfolds TPB TAM Quartile 1 Quartile 1 Quartile 1 Global Global US Wine Wine Wine Median Median Medi
Slide 54: The importance of an investment grade capital structure
Disciplined and strategic approach to capital allocation Maintain investment grade capital structure The importance of an investment grade capital structure We target net debt to EBITDAS of 1.5-2.0x through the cycle and up to 3.0x for accretive strategic initiatives Optimise Protect against Enable
Slide 55: Investment priorities for growth
Disciplined and strategic approach to capital allocation Organic and inorganic investment Investment priorities for growth Growth Treasury Treasury opportunities Premium Brands Americas Portfolio expansion Portfolio enhancing growth brands French COO capacity COO expansion Expand multi-COO sourcing
Slide 56: Capital allocation principles
Disciplined and strategic approach to capital allocation Capital allocation principles 1 Structure to ensure availability of capital for accretive investments Each division will have differentiated capital 2 return benchmarks whilst contributing to enhanced Group ROCE Capital will be allocated based
Slide 57: Sustainable shareholder returns
Disciplined and strategic approach to capital allocation Stable dividends and capital management Sustainable shareholder returns Dividend payout ratio – peer benchmarking2 1 Continue to target dividend payout between 55-70% NPAT over a fiscal year1 Treasury Wine Estates 77% Explore supplementing wit
Slide 58: A strong track record
Deliver attractive returns through the cycle A strong track record Total shareholder return – since May 20111 49% 179% 223% 287% 289% Treasury ASX 200 Consumer peers Wine peers Spirit peers Wine Estates 58 1 To 30 April 2021
Slide 59: Conclusion
TREASURY WINE ESTATES Conclusion Tim Ford
Slide 60: Conclusion
Conclusion Our 10 year journey has delivered substantial Our people are our most valuable asset and change and strengthened our business we are building a world class culture Sustainability is at the heart of everything We are reshaping TWE to be consumer-led we do, and we aspire to lead our industr
Slide 61: Thank you
Thank you WE ARE HERE 61
Slide 62: Definitions
Definitions Term Definition B2B Business to business CAGR Compound Annual Growth Rate COO Country of origin COGS Cost of goods sold Commercial wine Wine that is sold at a price point below $10 per bottle DTC Direct to consumer EBITDAS Earnings before interest, tax, depreciation, amortization, materi
Slide 63: Disclaimer
Disclaimer Summary information The material in this presentation is summary information about Treasury Wine Estates Limited (TWE) and its subsidiaries and their activities, current as at the date of this presentation unless otherwise stated. It should be read in conjunction with TWE’s other announce