Treasury Wine Estates Limited · ASX:TWE
Treasury Wine Estates — Investor Day (May 2021)
76 slides from Treasury Wine Estates's investor day presentation, May 13, 2021
Slide 1: TWE 2021 Investor Day including financial updates
13 May 2021 ASX ANNOUNCEMENT TWE 2021 Investor Day including financial updates Treasury Wine Estates Limited (ASX:TWE) is today holding an Investor Day in Sydney, Australia commencing at 10.00am AEST. Enclosed are the investor day presentation materials. The materials have been loaded to the ASX pla
Slide 2: Divisional Key Financial Information
o Treasury Premium Brands targeting EBITS margin in the high-teens. • As previously announced, TWE is currently undertaking a global supply-chain optimisation program. This program is now expected to deliver annualised benefits of at least $75m by F23, up from the $50m of annualised benefits announc
Slide 3: Sustainability Framework
Sustainability Framework TWE has also announced today an expanded suite of sustainability targets, including a new commitment to 100% renewable electricity by 2024 and net zero emissions (Scope 1 and 2) by 2030. For the purposes of ASX Listing Rule 15.5, TWE confirms that this document has been auth
Slide 4: Boldly leading change in the world of wine
TWE INVESTOR DAY Boldly leading change in the world of wine 13TH MAY 2021
Slide 5: TWE 2025
TREASURY WINE ESTATES TWE 2025 Tim Ford
Slide 6: Destination Zero Harm
Destination Zero Harm Emergency Procedures WE ARE HERE 3
Slide 7: Our team presenting today
Our team presenting today Tim Ford Matt Young Stuart Boxer Ben Dollard Kirsten Gray Chief Executive Officer Chief Financial Officer Chief Strategy and President, Treasury Chief Corporate Corporate Americas1 Services Officer and Development Officer Company Secretary Katie Hodgson Tom King Angus Lille
Slide 8: Board members in attendance
Board members in attendance Paul Rayner Warwick Antonia Korsanos Chairman Every-Burns Non-Executive Director Non-Executive Director 5
Slide 9: Agenda
10:00am – 10:15am TWE 2025 Tim Ford 10:15am – 10:30am The premium wine consumer Angus Lilley 10:30am – 10:50am Q&A 10:50am – 11:10am Break Building our future The new operating model Stuart Boxer 11:10am – 1:00pm Penfolds Tom King Treasury Americas Ben Dollard Treasury Premium Brands Peter Neilson 1
Slide 10: This is Treasury Wine Estates
This is Treasury Wine Estates Premium focused and consumer- led global wine company Award winning portfolio of premium wine brands Sales in over 70 countries across multiple distribution channels World class asset base in internationally acclaimed wine making regions Over 3,000 talented team members
Slide 11: Long-term investment case
Long-term investment case The elements supporting our ‘through the cycle’ growth ambitions Attractive Best global portfolio Winning RTM Unparalleled Strong and category of premium wine model in all global asset base flexible capital fundamentals brands priority markets structure 8
Slide 12: Our 10-year journey
Our 10-year journey A journey of substantial change that has strengthened our business Commenced trading on the ASX on 2011 the 10th of May 2011 Transitioned to a premium focused brand and consumer-led business Accelerated investments behind 2014 luxury inventory growth strategy Key corporate milest
Slide 13: F20 financial performance relative to pre-demerger
Our 10-year journey F20 financial performance relative to pre-demerger1 Portfolio Revenue premiumisation Premiumisation Earnings > 70% $81.9 $533m NSR premium NSR per case EBITS and luxury wine More than doubled Up over 50% Up over 160% Return Shareholder Profitability on capital returns2 20% 10.6%
Slide 14: The changing landscape
The changing landscape Changing market and consumer trends have created risks and opportunities for the wine category and for TWE Enduring Global Social, economic COVID impacts impacts and consumer trends • E-commerce growth & digital engagement • Australia-China relationship • Increased expectation
Slide 15: Global wine consumption
Global wine consumption Category trends remain strong, led by premium wine consumption Global still wine consumption trends1 Strong growth trends being led by premium price points 140.0 Peak COVID-19 Consumers are trading up, driven by younger Index 2014=100 consumption impact consumers who are spen
Slide 16: Our Plan on a Page
To be the world’s wine company We in the world of wine Sustainable & Consumer Multi-regional & Deep, long-term multi-regional focused premium multi-channel World class talent partnerships & sourcing & OUR PLAN ON A PAGE brand portfolio sales models networks winemaking We bring our whole self We are
Slide 17: The Game Plan
The Game Plan Consumer focused Multi-regional & World Sustainable & Deep, long-term premium brand multi-channel class talent multi-regional partnerships portfolio sales models sourcing & & networks winemaking • Consumer-led and • Strengthened • The TWE DNA at the • Continued building • Mutually bene
Slide 18: Our new operating model
Our new operating model Increased focus and accountability to unlock our long-term growth potential Treasury Treasury Premium Brands Americas Limited editions Icons & Bins Supply US Supply Treasury Business Solutions Corporate 15
Slide 19: We remain focused on quality growth
We remain focused on quality growth Our goal: drive growth, profit, efficient capital usage and sustainable shareholder returns TWE growth objectives Deliver sustainable top-line growth and high-single digit average earnings growth over the long-term1 Premiumise Expand EBITS Restore and grow our sal
Slide 20: We remain focused on quality growth
We remain focused on quality growth Each division will contribute differently towards delivery of the TWE growth objectives Drivers of TWE growth objectives Treasury Treasury Key metrics Premium Brands Americas Reshape portfolio, focused Reduction in commercial Luxury & premium % on growing luxury a
Slide 21: The premium wine consumer
The premium wine consumer Angus Lilley
Slide 22: Reshaping TWE to be consumer experience driven
Reshaping TWE to be consumer experience driven Innovation Experience Brands as our advantage for the future at our core Creating experiences that Future-proofing our Putting our unrivalled allow more consumers to business with portfolio of loved brands enjoy our wines and breakthrough at the corners
Slide 23: Globally validated five key consumer drivers of future wine growth
Globally validated five key consumer drivers of future wine growth Discovery Refreshing Step up Conscious Comfort Consumer sociability consumption of home opportunity Help me share Help me Help me choose Help me make more Help me reconnect something discover more something special conscious choices
Slide 24: Bold innovations to retain & recruit for the future
Bold innovations to retain & recruit for the future 19 Crimes Snoop Cali Red Penfolds Shangxia Lindeman’s Conscious #1 US WINE INNOVATION Luxury collaboration Consumption Relaunch OF 20201 21 1 IRI Market Advantage, MULO and convenience, still wine segment, MAT ending 27 December 2020
Slide 25: Digital-first experiences to enrich consumer engagement
Digital-first experiences to enrich consumer engagement Multi-brand digital media innovation Global digital innovation 22
Slide 26: Building a long-term roadmap for luxury growth
Building a long- term roadmap for luxury growth
Slide 27: Largest investment in luxury wine intelligence
Largest investment in luxury wine intelligence Markets Australia UK USA China Context & Discovery Phase 6,500 100X Uncover codes and cultural trends in Who is the luxury wine buyer of today and tomorrow survey interviews in-depth interviews Luxury beyond alcohol and their behaviours? with consumers
Slide 28: Fine wine is a product but luxury wine is an elevated experience
1 2 3 4 The Chinese luxury There is an increasing Fine wine is a Time, quality and consumer has very expectation that product experience remain different expectations luxury should do but luxury wine is true to luxury, but of luxury brands good, be good and an elevated cultural overlays be good for
Slide 29: Recruitment starts early
5 6 7 8 Recruitment starts Luxury starts at The more you know early. Gifting, on- There is a significant $50/£50/1000RMB the more you spend premise, family & opportunity to unlock in the minds of the friends are key more occasions for consumer recruiters younger consumers and female consumers
Slide 30: We have identified 8 clear opportunities to grow luxury
Gifting & Marking The Occasion We have Recruit new users Cellaring & through thoughtful gift choices Talkability identified Collecting Create Encourage recommendation 8 clear consumers paths for to cellar and consumers to collect share information opportunities to grow luxury Sustainability Luxury I
Slide 31: Building our future
Building our future Stuart Boxer Tom King Peter Neilson Ben Dollard Kerrin Petty
Slide 32: We have re-imagined our growth model
We have re-imagined our growth model TWE to be the world’s most admired premium wine company What has driven our What were What do we need for success to date? the limitations? the next stage? Transition to a premium focused brand Elevated and separate focus on and consumer-led business Untapped gro
Slide 33: Divisional operating model
Divisional operating model Brand & consumer-led divisional model to drive increased focus and accountability, unlocking our long-term growth potential Brand & consumer-led focus, 1 tailored to each divisions Treasury Treasury unique strategic, geographic and consumer characteristics Premium Brands A
Slide 34: Central functions
Central functions Treasury Business Solutions and corporate to leverage our global scale and support divisional priorities Treasury Business Solutions Corporate A trusted solutions provider, leveraging scale Streamlined corporate centre to drive growth, efficiency and innovation Responsible for: Rel
Slide 35: Integrated business strategy
Integrated business strategy The world’s most admired premium wine company Penfolds Treasury Premium Brands Treasury Americas A global luxury icon The world’s most inventive branded wine The premium wine market leader in the Vision business, bringing the pleasure of premium Americas wine to more peo
Slide 36: Penfolds
TREASURY WINE ESTATES ia Penfolds Tom King —
Slide 37: Vision
Penfolds Vision A global luxury icon 34
Slide 38: Penfolds snapshot
Penfolds snapshot Worlds most Penfolds Grange admired wine brand1 24x perfect score recipient Sold in over Unparalleled 60 global luxury markets asset base 3 wineries A$50+ Portfolio 30 centre of gravity vineyards2 1 Drinks International annual poll (2016, 2019) 35 2 Owned and leased vineyards
Slide 39: What does it mean to be a global luxury icon?
What does it mean to be a global luxury icon? A leader in wine but loved by consumers for being more than a wine brand Mentioned in the same breath as other iconic luxury houses Known and loved by consumers around the world Maintained relevance with consumers and luxury experiences that draw them ba
Slide 40: Like no other wine brand in the world
Like no other wine brand in the world Rich and authentic Highly acclaimed Multi-tier brand Global distribution Growing, global multi- history with portfolio reflecting portfolio delivering footprint centred regional sourcing exceptional luxury unique and renowned breadth of luxury around high- model
Slide 41: Strategic growth drivers
Strategic growth drivers Scale Penfolds luxury status to drive global demand and recruit new consumers Grow global distribution and availability Optimise portfolio for long-term growth 38
Slide 42: Penfolds global consumer
Penfolds New Luxurians global consumer Emerging category knowledge Like to follow cultural trends and explore new experiences Appealing to a diverse range of experience seeking luxury consumers Connoisseurs High category knowledge Passionate about wine and experiences 39
Slide 43: Scale luxury status to drive global demand
Scale luxury status to drive global demand Accelerate engagement with the new age of luxury consumer Deliver elevated luxury experiences that go beyond the product Be culture led and disruptive to recruit new consumers Collaborate with brand advocates and opinion leaders 40
Slide 44: Penfolds House Chengdu
Penfolds House Chengdu April 2021 41
Slide 45: Collaborating with brand advocates and opinion leaders
Collaborating with brand advocates and opinion leaders 42
Slide 46: Grow distribution and availability
Grow distribution and availability Build distribution and availability across consumer facing channels globally Scale DTC and e-commerce Become the on-premise wine of choice in priority global cities Increase our presence as the ultimate luxury showcase in global travel retail Harness direct to coll
Slide 47: Penfold's global growth
Penfold’s global growth Penfold’s Bins & Icons – four year NSR CAGR1 by market 32.6% 18.8% 13.2% 8.5% Australia Asia excluding Americas EMEA China % F21 Bins & 8% 21% 34% 4% Icons NSR2 1 Four year period from F17-F21 (estimate) 44 2 F21 estimate
Slide 48: Grow distribution and availability: Asia (ex China)
Grow distribution and availability Key channel and market opportunities Asia (ex China) Key Initiatives for Growth Distribution amplification through RTM optimisation, e-commerce expansion and fine wine retail Emerging markets – visibility, awareness, promotion, education & investment Mature markets
Slide 49: Grow distribution and availability: Australia
Grow distribution and availability Key channel and market opportunities Australia Key Initiatives for Growth Availability in Independent retail via investment Amplify convenience proposition Increase brand awareness of entry level tiers for new consumers Established and growing luxury wine market Ac
Slide 50: Grow distribution and availability: United States
Grow distribution and availability Key channel and market opportunities United States Key Initiatives for Growth Penfolds to partner with Treasury Americas in the US Amplification of both California & Australian collections Investment to build brand awareness outside of collectors and the trade Esta
Slide 51: Grow distribution and availability: EMEA
Grow distribution and availability Key channel and market opportunities EMEA Key Initiatives for Growth Amplify distribution and multi- channel availability, led by retail and e-commerce Invest to increase brand awareness and heightened consumer experiences Accelerate in direct to consumer, Establis
Slide 52: Portfolio hierarchy
$950+ Limited editions Portfolio hierarchy Icons Bins Luxury Differentiated luxury experiences across portfolio price points $30 Premium $10 Commercial 49
Slide 53: Optimising the portfolio for long-term growth
Optimising the portfolio for long-term growth Prioritise growth of Bins & Icons ranges and maintain pricing and margin structure Recruit new Penfolds consumers with Koonunga Hill and Max’s Californian and French collections to increase accessibility, diversify sourcing and unlock new revenue streams
Slide 54: Expanding the portfolio with new COOs
Expanding the portfolio with new COOs Multi regionally sourced, made to the Penfolds style and quality standard US COO French COO Released March 2021 2023 release Icons Quantum Bin 98 Icons Icon and luxury wines Luxury from the finest regions in France Luxury Bin 600 Bin 704 Bin 149 51
Slide 55: Californian collection
Californian collection Outstanding market response following inaugural collection release 2018 Quantum Bin 98 2018 Bin 149 2018 Bin 704 2018 Bin 600 Cabernet Sauvignon Cabernet Sauvignon Cabernet Sauvignon Cabernet Shiraz RRP US$700 RRP US$149 RRP US$70 RRP US$50 100pts 98pts 96pts 93pts Somm Journa
Slide 56: Key Financials
Key Financials Historical performance1 Future financial priorities F18 F19 F20 Grow NSR Volume (m9LE) 2.1 2.8 2.5 Focus on recruiting new consumers and NSR (A$m) 544.3 816.0 765.2 growing global availability NSR/Case (A$) 255.3 287.3 312.2 EBITS (A$m) 225.2 363.3 357.3 Grow EBITS Maintenance of prod
Slide 57: In summary
In summary Penfolds is like no other wine brand in the world We will leverage our outstanding luxury credentials to expand our global consumer base We are very confident of the growth opportunity for Penfolds in global luxury markets 54 54
Slide 58: Treasury Americas
Treasury Americas Ben Dollard
Slide 59: Vision
Treasury Americas Vision The premium wine market leader in the Americas 56
Slide 60: Treasury Americas snapshot
Treasury Americas snapshot A key player in the world’s largest premium wine market #2 in 90% luxury wine1 1 Luxury and premium NSR2 10 Focus Leading Napa Valley Brands asset base 8 wineries A$800m 45 revenue vineyards3 1 IRI Total US, MULO and convenience, 52 weeks ending 21 March 2021 2 1H21 pro-fo
Slide 61: Treasury Americas has the key ingredients for growth
Treasury Americas has the key ingredients for growth NAPA VALLEY Focus brand Collaborative and Leadership team Bold consumer- Leading Napa valley portfolio of trusted highly engaged who know how driven innovation asset base, including premium brands distributor and retailer capability world class ce
Slide 62: Treasury Americas Consumer
Treasury Americas Lifestyle Consumer Luxury • Provide an entry point to wine • Entering category in late 20’s Experience Opportunity to win more occasions Opportunity with Female Luxurian • driven at • • Partnerships to access new consumers all touch • The luxury category is evolving points • Giftin
Slide 63: Market & channel landscape
Market & channel landscape …TWE Americas is winning today and well The landscape is shifting… positioned to accelerate in growing channels US is the 2nd fastest growing Premiumised portfolio and admired brands Premium wine market in the world1 Cali Red and Rose have shown excellent growth Retail is
Slide 64: Priority portfolio hierarchy
Priority portfolio hierarchy Luxury Premium portfolio with growing luxury distribution and velocity $30 Premium $10 Commercial 61
Slide 65: Portfolio momentum
Portfolio momentum1 #1 Spirit +25% Over 20 90+ #1 new wine Fast growing barrel age Top 20 Ultra increase in Top 5 Super scores innovation NZ Sauv Blanc Premium Cab wine in $15- Luxury Luxury brand across 25 of 2020 +30% Sauv 20 segment sales vintages 62 1 IRI Total US, MULO and convenience, 52 weeks
Slide 66: Strategic growth drivers
Strategic growth drivers Drive relentless focus throughout the business Portfolio expansion through bold innovation, leading luxury credentials and accelerating in e-commerce Asset, portfolio and cost optimisation 63
Slide 67: Our business is all about focus
Our business is all about focus Relentless focus on consumer trends, preferences, need states, path to purchase and experiences Priority Priority Priority Wholesale Growth Brands Markets Customers Network Priorities California Bold New York innovation Illinois E-commerce Texas Key independent Luxury
Slide 68: Distribution model update
Distribution model update • We recently completed a detailed review of our US distribution model, which focused on: US distribution map - Our future state premium US wine business following the recent commercial portfolio divestiture - Improving our independent retail performance in California - Cha
Slide 69: Delivering bold innovation
Delivering bold innovation Penfolds California collection 19 Crimes Cali Rose Matua Lighter range Launched March 2021 Launched April 2021 Shipping June 2021 66
Slide 70: Crimes Cali Rose
19 Crimes Cali Rose 67
Slide 71: Leading with our luxury credentials
Leading with our luxury credentials Create industry leading luxury activation, story-telling, education and experiences Scalable DTC Dedicated luxury Best in class Wineries platforms sales model and Vineyards 68
Slide 72: Our luxury portfolio
Our luxury portfolio 69
Slide 73: Driving acceleration in e-commerce
Driving acceleration in e-commerce Easy to Find. Easy to Buy. Easy to Enjoy. Branded E-Comm/ DTC B2B / 3- Tier E-Comm Measurable channel where we Dedicated resources Digital Marketing are outpacing market Improved customer integration New platform with upside for Digital marketing driving awareness
Slide 74: Asset, portfolio and cost optimisation
Asset, portfolio and cost optimisation Complete restructuring Pursue opportunities initiatives across brand to fill key portfolio gaps, portfolio and asset base organically or through M&A Financial priorities Adjust operating model and Divestiture of non-priority Restructuring of supply organisation
Slide 75: Financials
Financials Historical performance1 Future financial priorities F18 F19 F20 F20PF2 Volume (m9LE) 13.5 13.9 12.3 7.6 Premiumise sales mix Reduction in commercial portfolio will NSR (A$m) 935.4 1,084.4 1,014.6 810.8 significantly transform sales mix NSR/Case (A$) 69.1 78.2 82.6 106.8 EBITS (A$m) 188.1
Slide 76: In summary
In summary Treasury Americas is a fundamentally changed business that is well placed for sustainable long-term success Our business is all about focus: brands, markets, customers and growth priorities We have an outstanding premium portfolio that is growing ahead of the market and is led by innovati