Just how good is the international framework of a business with the scale ofTreasury Wine Estates? We will find out in the coming weeks and months.
The drinks industry is blessed with a handful of international businesses that have the scale to cover the world not just with their wines and brands – but their people. Take Treasury Wine Estates. A business that really is a sum of its parts. From winemaking that covers everyday supermarket big sellers – Blossom Hill and Lindemans for example – to crafting some of the most coveted and sought after wines in the world. Like Penfolds Grange.
Just that part of the company is complex enough when you consider the scale of production involved, the hectares and acres of vineyards it owns, grapes it buys, fruit it crushes a year. Then there is the packaging, the design, the marketing and the actual selling of the wines and brands it creates which takes Treasury Wine Estates into a whole spectrum of business sectors. All of which require specialist teams and skillsets, that equally have to answer to the bottom line.
Skills and teams that will be currently tested like never before because of the outbreak of Covid-19 around the world. Throw in the fact that Treasury Wine Estates is a public business and it raises the stakes even higher.
So how would you fancy getting your hands on all that? Or at least a fair chunk of it? That’s the task that faces Michelle Brampton in her role as EMEA managing director of Treasury Wine Estates, a role she took on in November 2018.
But then she has had a little time to get used to how things work at TWE having been in the business for 18 years. Starting out, as she remembers, on an initial six month contract working in the finance office at the Twickenham base that is still its UK home.
It’s those finance and commercial skills that Brampton has continued to hone over her career at TWE, through a serious of roles taking in finance director, commercial director and chief financial officer along the way.
A key skill of any finance chief in a business is to ensure its safe and stable and Brampton has certainly not come into her position with any cunning game plan to rip up what has gone before.
Far from it. In fact she is more than keen to carry on the work that her predecessor, Tom King, had put in place before he moved on to take up his new role as managing director for North Asia.
Not change for change’s sake
“There is no need to change anything for change’s sake,” she stresses. “What I have been focused on is how do we make the business sustainable in every sense of the word. And that means the UK, Continental Europe, the Nordics, Middle East and Africa. What Tom had dealt with previously was the shock of the referendum and the currency impact that had and how we managed through that period of uncertainty.”
Brampton was talking before the scale of the Covid-19 oubreak hit Europe, but as her key point at the time was to concentrate on what she saw as the “the next phase” of “sustainability” then the business challenge has not changed, even if the world we are operating in has.
“The markets vary quite a lot in terms of scale and profitability and so do our brands. It’s about managing that portfolio of regions and brands to make it stronger and more sustainable.” It’s a bit like handling “a patchwork quilt,” adds Brampton.
The UK’s role, for example, is very different to the rest of the countries she looks after. Just the sheer “competitiveness and scale” of the UK wine market brings key benefits to the group as a whole.
Treasury’s wine range includes many of the country’s best known brands
“If you want to be a global branded company, which is what we are, then if you are not represented in the UK you are not in one of the most important wine markets in the world. But it is a scale opportunity as well. As is northern Europe with the big retail groups.”
Those are clearly the big power house markets for Treasury to be 100% on top of. Then alongside that are the different challenges and opportunities there are in working with the Scandinavian monopolies, and the more niche potential for New World brands in southern Europe, which are such strong wine producing countries in their own right, says Brampton.
Then the Middle East and Africa are probably more longer term growth opportunities, but again on a step by step basis where every country and state has its own issues to address.
Whatever the individual strategy might be for any specific country the main objective is always going to be push and drive its major brands. We are not going to be seeing a whole swathe of new products looking to promote indigenous varieties or new regions.
“We are not about proliferation. We are about focus and big brands,” says Brampton.
Diverse and focused approach
Brampton’s predecessor Tom King was promoted to head up Treasury’s north Asia business
What is diverse and different is the demands and needs of all the markets and channels that Treasury is in across Europe and the Middle East. It is too easy, she says, to talk about Europe as one entity, when it is such a myriad of different countries, each with their own needs and challenges.
This, in turn, places much bigger demands on the senior Treasury team to have the skills and experience to know how to plan for and manage the different markets where it is selling its wines.
Brampton says it is a responsibility that Treasury takes very seriously: “What the company does well is to try and build really strong global brands and then use the capability in the organisation to help manage them for a) what is best for the business, but then b) to also develop people. So that a constant change is around who is the best person to do that, who can stretch and develop.”
As a result it has seen a number of the senior team at Treasury in the UK move, like Tom King, to take on senior roles elsewhere in the world for the business. “We have become a net exporter of talent because the market here is so competitive and so developed. You build a skills set in this market that is really useful in other markets. There’s lots of examples. Our most recent HR director has looked after Europe and Asia for the last three years and is just back from 18 months in China. There has been a lot of back and forth between Asia and Europe in particular.”
Growth in Asia
Penfolds’ growth in Asia is said to be responsible for 66% of value growth of Australian wine in China, according to Nimbility’s Ian Ford
The needs of the overall Treasury group is changing all the time to keep in step with the demands of the market. For whilst Melbourne might be where its headquarters are, more and more of its power is being pushed to China in response to this enormous demand for its wines there.
Chinese wine expert Ian Ford, of the Nimbility agency, told Vinexpo Shanghai that Penfolds is responsible for 66% of all the value growth of the booming Australian wine market in China. A quite staggering statistic when you consider Wine Australia claims the country’s overall value has now reached A$1.2billion, an increase in value of 18%, in the year from September 2018 to September 2019.
Having its best people on the ground to make the right decisions has helped drive Treasury and Penfolds’ position there. Particularly it market leading move in 2015 to switch from what had been an exclusive distribution deal for Penfolds with one importer, to go to a multi importer model. It not only transformed the brand’s fortunes in China, but has changed the importer model for the whole country. Almost overnight it opened the market and different channels for multiple players to be working with effectively the same brands, helping take those wines to China’s mass market.
Then there are also the big demands to grow and hit the numbers in the United States too, and how important its American performance is on the overall Treasury results and share price.
All of which means Treasury, as a global player and potential employer, means it is in a very different place to the other big wine players in the UK market, claims Brampton.
“We are not hierarchical. It’s less of a career ladder and more of a career spider web that allows you to move out and do different things to learn different thing and then perhaps move back to your core skills or move on to where you want to go to. Treasury is very supportive to allow you to do that.”
UK opportunities and challenges
When we spoke the focus was all about what we can expect when the UK finally leaves the EU at the end of 2020. Just getting through the next few months is clearly priority number one. But at some stage we will have to look at the ramifications, challenges and opportunities of what lies beyond January 1, 2021.
Brampton says providing the UK can get a free trade deal in place with the EU, then there are some positives to look forward to. Firstly with Australian wine and the potential removal of CCT tariffs which will help “level the playing field a little with Chile and South Africa”, she says.
There are though, she adds, a lot of unknowns, particularly around how easy it is going to be to actually trade full stop, with potential new administrative burdens to take on board.
As for the dynamics of the market, she points to the big retailers “continuing to have a tough time”, in face of competition from the discounters and can’t see that changing for some time to come.
The impact of the 19 Crimes brand has taken even Treasury by surprise
It’s Treasury’s job to make sure it has the right brands to sell them, armed with the right messages and support. She points to the enormous success that 19 Crimes has had as a case in point.
Then there are also “good opportunities” around the “category blurring” that is going on and the launch of Blossom Hill Gin Fizz and low alcohol options through the Lindemans brand.
“From a brand perspective it is all about how you are relevant to the consumer and causing a bit of disruption. Then from a channel perspective the on-trade is still untapped and has potential.”
It all means there is an even greater onus on Treasury to find even more effective channels and routes to market for its brands. The consumer, she says, is shopping across multiple, discount convenience, online and on-trade and it needs to be there with its brands so that it is “building awareness across them and reminding them about brands”.
It also brings her back to the ultimate focus of managing a sustainable business. “It is not wise to have all your eggs in one basket. So making sure you are visible in the retailers and you are visible in the on-trade. The bricks and clicks combination is also working well for us.”
She believes it’s too soon for big wine brands to be thinking too far away from the traditional routes to market and whilst direct to consumer is “definitely” something to consider for the luxury end of wine, it’s not currently practical for its major mainstream brands.
“Whether you can drive consumers away from their weekly shop or their convenience purchase to be buying [direct] online I’m not convinced,” she says.
“At the luxury end there is an opportunity to also get to know your consumers better and to build those relationships and give it sustainability so that you are making the right connections for the longer term.”
- In Part Two of our interview we will explore in more depth the opportunities for each Treasury’s brands and the right marketing approach to take for them.
