Australian wine producer Treasury Wine Estates strengthens its presence in the US market by acquiring California-based Daou Vineyards for $900 million. After some complicated years, the company continues to turn its back on China to avoid slowing down its growth.
Australian wine giant Treasury Wine Estates has announced a major agreement to acquire California-based Daou Vineyards for $900 million. This strategic operation is designed to strengthen Treasury Wine Estates’ position in the US market, at a time when the company is facing uncertainties regarding its exports to China.
Treasury Wine Estates, which owns renowned brands such as Penfolds and Wolf Blass, sees the acquisition of Daou Vineyards as a key opportunity to enhance its luxury wine offering. This category encompasses bottles retailing between $20 and $40, thus offering greater profitability.
The integration of Daou Vineyards aligns with Treasury Wine Estates’ strategic objective of moving its product portfolio upmarket. However, this acquisition plunges the company deeper into a geographical segment that has proved difficult over the years, despite adjustments to its product offering.
Australian wines in a tough spot
Daou Vineyards, founded by the Lebanese Daou family who emigrated to California, is recognized as the fastest-growing luxury wine brand in the United States. Treasury Wine Estates is leveraging its size and international presence to make Daou Vineyards a “truly international and global brand.”
Tim Ford, Managing Director of Treasury Wine Estates, is “very optimistic” about the benefits of integrating Daou Vineyards into its Treasury Americas subsidiary. This is part of the Australian company’s quest to increase sales in the global luxury wine segment, while seeking to expand its presence in the US market.
Australian wine exports fell 11% to A$1.79 billion in the 12 months to September, state body Wine Australia said on Tuesday, noting “exceptionally challenging” global market conditions since 2020.
Strengthening the US market despite uncertainty in China
In 2021, as China imposed prohibitive tariffs on Australian wines, Treasury invested $315 million in the purchase of luxury brand Frank Family Vineyards in California. However, earnings from Treasury’s US operations declined in the year to June 30, 2023.
Across all markets, the company reported net profit down 3.3% year-on-year to $254.5 million for the last full year, but says it is “well placed” to return to growth this year.
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Featured photo : ©Treasury Wines Estates
