Treasury Wine Estates gave a trading update to investors this week, where it praised the jewel - Penfolds.
👉 Background: Treasury Wine Estates is the ASX-listed winemaker and distributor of wine. Think: Wolf Blass, Lindeman's and the jewel in its crown, Penfolds.
👉 What happened: Treasury Wine Estates (TWE) gave a trading update to investors this week, where it praised the jewel - Penfolds. That's because consumers are still buying wine at the upper-end of the wine segment, but the under $10 segment has been squeezed.
👉 What else: So TWE is focused on tapping into the premiumisation across the wine sector. And, after a few years on the outer in China, it's hoping that Chinese tariffs may be lifted soon. And that means even more demand for premium wines.
💡 Premiumisation is the strategy of enticing customers to pay more for what is 'perceived' as a better-quality product of service.
💡Premiumisation isn't quite new - we've seen airlines doing it with first-class experiences for decades. But now more companies are trying to extract moremoney from their wealthiest customers.
💡That's because premium products have premium margins. For TWE, their premium products, like Penfolds, are helping them aim for a tasty profit margin of 25%.
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