Australia’s Treasury Wine warns of demand hit from inflation

Australia’s Treasury Wine Estates (TWE.AX) warned on Thursday that inflation was squeezing demand for its commercial-grade wine and driving up packaging costs, sending its shares nearly 8% lower.

The country’s biggest winemaker flagged challenging market conditions and consumption outlook for commercial wine, especially in Australia and the United Kingdom, and said it was undertaking a review of its domestic supply chain.

“Wine is probably more of a luxury item rather than an essential. So, I think when consumers are feeling the cost of living crisis, they are going to be pulling back on certain items like wine,” said Josh Gilbert, a market analyst at eToro.

Winemakers across the globe have reported strong profits on the back of solid sales of premium brands.

Customers of premium brands will continue to consume wine even during the cost of living crisis as opposed to budget-conscious consumers, said Carl Capolingua, a market analyst at thinkMarkets.

This report’s information was first seen on REUTERS; to read more, click this link.