TWE Treasury Wine Estates Ltd

MELBOURNE, Australia—Treasury Wine Estates Ltd. is making another big run at the U.S. market, after overly rosy estimates about demand there a few years ago led the Australian wine producer to famously dump thousands of gallons of unsold inventory.

Now Treasury is focusing on pricier wines in the $10 to $100-plus range a bottle, rather than popular but cheaper wines such as its $6 a bottle White Zinfandel. Treasury is the world's eighth-largest wine producer by volume, according to data provider Euromonitor International.

The wine producer has also ditched marketing staples, such as close-ups of bottles against stately vineyard backdrops, instead spending millions of dollars on a campaign for its Beringer brand featuring postcard-style images launched first on Instagram.

The Instagram-led campaign is Beringer's first major U.S. ad campaign in five years, elevating social media alongside traditional advertising such as magazines and billboards. It launched in the U.S. in late October and will run through the holiday season, and it is set to roll out across Asia next year.

The campaign is Treasury's latest move in the important U.S. market, which is the leading wine consumer in the world. Americans accounted for 15% of the $223.27 billion in reds, whites and roses consumed last year, according to Euromonitor.

Some observers are skeptical.

"Beringer is fundamentally a commercial, mass-market brand," said Daniel Mueller, an analyst at investment-research firm Morningstar. While investing in the label is positive, it will be a "long slog" building up its image, he said.

Beringer, best known for its mass-market offerings, suffers from a lingering hangover in the U.S. after the company in 2013 was forced to destroy thousands of gallons of wine that had passed its drink-by date, after overestimating demand for its lower-priced wines. That cost it about 150 million Australian dollars, or roughly US$109 million.

Treasury also faltered in a recent foray into low-calorie wine with the Skinny Vine brand in the U.S. During that campaign, Treasury invited consumers in a YouTube video to take a taste test to see if they could distinguish between the low-calorie product and regular wine. But the wines were seen as compromising on an indulgence, and Skinny Vine was discontinued this year because of disappointing sales.

The Australian wine producer in 2014 fended off two takeover approaches, including one from private-equity giant KKR & Co. The company bet instead on a turnaround strategy proposed by Chief Executive Michael Clarke—hired in March 2014—who has retail experience in everything from Indian chutneys to gravy granules.

Mr. Clarke has focused Treasury on 15 brands out of a portfolio of roughly 80, and is pushing the company to seek earlier estimates on popularity of products so unwanted bottles don't pile up.

Treasury posted total revenue for the year ended June 30 of A$1.96 billion, up 8.1% from a year earlier. It swung to a fiscal-year profit of A$77.6 million from a year-earlier loss of A$100.9 million. Treasury in October increased its bet on its U.S. prospects when it bought most of Diageo PLC's North American and British wine operations in a US$552 million deal.

The campaign emphasizes several of Beringer's pricier vintages such as its $160-a-bottle Private Reserve Cabernet Sauvignon.

In the series, dubbed "Better Beckons," ad company J. Walter Thompson Co. teamed the winemaker with Murad Osmann, a Russian photographer with 3.7 million Instagram followers, for an initial six photographs. Mr. Osmann's photographs feature his wife, Nataly Osmann, in front of such scenes as the New York City skyline and the Golden Gate Bridge. It was Mr. Osmann's Instagram photographs of his wife as they traveled around the world that caught the attention of the ad company and Treasury.

"With digital, you know immediately if people are engaged," said Simon Marton, Treasury's chief marketing officer. The first photo garnered 200,000 "likes" on Mr. Osmann's Instagram feed in its first two weeks, said Mr. Marton, who described that as a strong start.

While makers of spirits and beer have seized on social media in recent years, Beringer's Instagram-led campaign differed from many wine companies' emphasis on product shots, said Ben James, creative director at J. Walter Thompson.

Write to Robb M. Stewart at robb.stewart@wsj.com

(END) Dow Jones Newswires

December 27, 2015 20:45 ET (01:45 GMT)

Treasury Wine Estates (ASX:TWE)
Historical Stock Chart
From May 2024 to Jun 2024

Treasury Wine Estates (ASX:TWE)
Historical Stock Chart
From Jun 2023 to Jun 2024