Morningstar | Treasury's execution has been solid against a a favourable end market, but we don't see a moat.
Treasury Wine Estates has focused its sights on the growing premium wine market, which should boost the firm’s revenue per case and operating profitability. But we expect the midrange of the wine market to remain ultra-competitive, and we see these products continuing to make up the bulk of Treasury’s portfolio, despite a concerted de-emphasis on low-end commercial wines. As such, while the company likely enjoys solid brand intangible assets at the very high end of its wine range--including in the Penfolds, Stags' Leap, and selected Wolf Blass labels, among others--we expect pricing pressure to remain at critical midrange price points, and profitability to continue trailing global wine leaders. In addition, the current market valuation leaves little room for error in issues such as expansion and execution in China, competitive response from other wine producers, or disruptions in global economic growth.Treasury Wine Estates is engaged in viticulture and winemaking, and the marketing, sale and distribution of wine. Co.'s wine portfolio includes wine brands such as Penfolds, Beringer, Lindeman's, Wolf Blass, Stags' Leap, Chateau St Jean, Beaulieu Vineyard and Sterling Vineyards. Co. also distributes beer and cider under license in New Zealand and provides contract bottling services to third parties. Co. maintains its operations in four regions: Australia and New Zealand, Asia, Europe, and Americas.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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