The alcoholic beverages industry, which includes wine, beer and other spirits, is one of the largest markets for the Australian consumer sector. Wine exports represent just over 1% of the country’s total exports. Australian wine is one such product that not only enjoys significant consumption across the country, but also around the world. In terms of statistics, around 60% of all wine produced in Australia is exported. Australian wine producers export their products mainly to China, the United States and the United Kingdom.
However, the size of exports to China has decreased significantly since the country introduced its import tariffs. Australian companies, initially affected by this move by China, have gradually shifted their focus to other geographies and are now performing decently.
On that note, let’s discuss two ASX-listed wine stocks that can be explored by investors in February:
Cash Wine Estates Ltd (ASX: TWE)
Treasury Wine Estates is engaged in sourcing and viticulture; production and marketing of wine; and sales and distribution. Australia and New Zealand, the Americas, Asia, Europe and Latin America are the main geographies where the company operates.
Despite recent challenges posed by Chinese tariffs on the company’s wine, Treasury Wine has performed on a decent note. The Australian winemaker has turned its attention away from China and is looking to expand its presence in other markets.
In FY21, the company’s net sales declined 3%. However, net profit after tax increased slightly by 1.8% despite the challenges posed by higher import duties.
The company recently acquired Frank Family Vineyards, which is seen as a major step in growing Treasury Wine’s market share in the luxury wine category.
The company has given a negative year-to-date (YTD) return of more than 15%. Over the past year, the stock has returned over 7%.
Australian Vintage Ltd (ASX: MEDIUM)
Australian Vintage’s brand portfolio includes Miranda, Nepenthe, Tempus Two, Passion Pop and Mcguigan Wines. Its offerings encompass vineyard management, contract processing and packing, bulk wine production, packing and sourcing.
Australian Vintage was among the few Australian wine companies that was largely spared from rising Chinese tariffs, as its direct exposure to the country accounted for just 1% of all sales.
In FY21, the company performed very well in its core businesses in the UK and Australia. It posted a record 79% improvement in net profit after tax (NPAT) for the 12 months to June 2021. The result is the highest AVG ever in the last 10 years.
The company has yielded a negative year-to-date (YTD) return of almost 12%. Over the past year, the stock has generated a return of more than 13%.
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