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Reduced focus on 'unsustainable volume' in UK hits Treasury Wine Estates' European figures

Published:  19 August, 2015

Australian wine giant Treasury Wine Estates saw its earnings in the Europe, Middle East and Africa region cut in half in the year to June 30, as the company sought to move away from low margin business in British supermarkets.

EMEA earnings fell from A$29.1 million (£13.6 million) to A$14.4 million (£6.7 million) with the Lindeman's and Wolf Blass owner looking to "exit from unprofitable and unsustainable volume in the UK", it said in its year-end financial statement.

It added: "The UK continues to be a challenging market characterised by heightened levels of competitor activity and increased pricing pressure, particularly in the commercial segment."

It added that investment in marketing in the first half had brought about higher volumes in the second six months of the year when it had achieved increased listings for both Lindeman's and Wolf Blass.

Chief executive officer Michael Clarke said: "Our ambition is to become the world's most celebrated wine company - a company that enriches peoples' lives with quality wine brands.

"Fiscal 2015 was a reset year for our company. Fiscal 2016 is about growth, as we leverage the step-change in consumer marketing investment and sales execution, lower overheads and more sustainable base business that we have embedded in fiscal 2015.

"TWE enters fiscal 2016 with the greatest pipeline of consumer marketing programmes in place in the company's history, including brand innovations and campaigns.

"By the end of the first half of fiscal 2016, 10 of our 15 priority brands will either be relaunched, refreshed via outstanding innovation or promoted via exciting advertising and brand activation campaigns."

Overall earnings for TWE were up 21.9% over the year to A$225.1 million (£105.6 million) and the company recorded net profit of A$77.6 million (£36.4 million) after a loss in the previous year of A$100.9 million (£47.3 million at today's exchange rates).

Beringer, Wolf Blass, Penfolds and Wynns were among the growth brands in the company's 15 priority labels, which achieved a 13% combined growth in sales.