Australia is home to several important wine varieties, including the reds Shiraz, Cabernet Sauvignon, and Merlot, as well as the whites Chardonnay, Sauvignon Blanc, and Pinot Gris. Australian wine is exported and consumed globally in addition to being consumed locally. The nation has 65 wine regions, which help produce more than a billion liters of wine annually. These regions include the Yarra Valley in Victoria, the Barossa Valley in South Australia, and the Hunter Valley in New South Wales.
Let’s take a look at some of the top 5 ASX ‘wine stocks’ for 2024 in different sizes based on their market capitalization. These are as follows:
Note: The market cap and the share price of the selected ASX companies mentioned are based on 30 January 2024.
Treasury Wine Estates Limited (ASX: TWE)
Market cap: $8.49 billion
The TWE is adamant about achieving long-term, sustainable financial objectives. The organization strives to sustain both high single-digit average earnings growth and top-line growth. Penfolds shipments are scheduled to phase in, and this will be reflected in the consolidated EBITS, which will be weighted to the second half of FY2024. The business anticipates dividing group EBITS between 45% and 55% over the course of the year (1H–2H). The TWE’s premiumization trend remains strong across the wine sector all over the world, with consumers shifting towards more premium and luxury offerings. The new consumer behavioral trend shifting ‘has enabled the company to attract new consumers into this specific category. The company’s priorities across the three divisions and the TWE enterprise remain consistent with the execution focus for FY2024.
Endeavour Group Limited (ASX: EDV)
Market cap: $9.91 billion
The company continued to build strong customer engagement, with both BWS and Dan Murphy recording improvements in customer metrics. The group’s strategy can help in growth ahead of the market, with retail and hotels acting as a natural hedge. The stock, with abating downward momentum, is trading above its monthly support. On the monthly chart, it is still moving above its EMA (exponential moving average). The stock has good potential to perform in the near to medium term. It continues to see online sales growth, supported by its continued investments in digital platforms and engagement.
Lark Distilling Co. Limited (ASX: LRK)
Market cap: $94.69 million
The ongoing emphasis that LRK is placing on LARK's global expansion will diversify the company's operations and offer a growth platform to counter the decline in consumer confidence. To develop long-term brand equity to support both domestic sales and provide a solid foundation for international market expansion, the company has been investing in marketing each year. LRK reported having $5.5 million in cash on hand as of 31 December 2023, with a committed bank facility worth $15 million remaining undrawn. Year-over-year production cash savings are the outcome of maintaining the emphasis on capital discipline. Furthermore, the underlying operating cash flow continues to improve as a result of the emphasis on capital and cash discipline.
Good Drinks Australia Limited (ASX: GDA)
Market cap: $51.88 million
The most noteworthy progress was observed for the company’s own brands. The own brands increased in volumes during the year, saw a considerable reduction in its COGS and continued to outperform the retail beer market in general. The consistent product development as seen through the launch of Rider Lite will enable a wide range of market offerings and drive sales and marketability – one of the key focus points of the company. The receipt of the award can further be expected to amplify market recognition of the company’s brands in the near future.
Australian Vintage Limited (ASX: AVG)
Market cap: $94.74 million
AVG is focusing on maintaining its position as a market leader in the no-and-low wine segment in both Australia and the UK, with plans to release new products specifically designed for the upcoming ABV tax in the UK. The company is also preparing for the reopening of the Chinese market by working closely with its key distributor, COFCO. The company is also working on reducing its inventory to improve operating cash flow in the second half, with plans to lower shipping to the UK and take advantage of potential lower sea freight prices. The company is taking a proactive approach to addressing the challenges it faces and capitalizing on new opportunities in the market.
Reference: *All Data has been sourced from Company announcements and Refinitiv, Thomson Reuters
Frequently Asked Questions (F.A.Q)
What are the best ASX-wine companies for 2024?
• Treasury Wine Estates Limited (ASX: TWE)
• Endeavour Group Limited (ASX: EDV)
• Lark Distilling Co. Limited (ASX: LRK)
• Good Drinks Australia Limited (ASX: GDA)
• Australian Vintage Limited (ASX: AVG)
What are Treasury Wine Estates Limited's fundamentals?
A well-considered strategic capital allocation process and higher EBITS have led to the company's current 11.3% return on capital employed. As of right now, the company has $1.4 billion in total available liquidity. This comprises undrawn committed facilities worth additional $800.9 million and cash reserves of $565.8 million. The company's expectations were met by the net debt to EBITDAS ratio of 1.9x, which allowed for flexibility in terms of investment, growth, and shareholder returns. At the moment, the ROE is 6%.
What is Lark Distilling Co. Limited's compound annual growth rate?
Because of management's decision to consolidate production at Cambridge Distillery and their renewed focus on cost control, the company's underlying net operating activity cash outflows improved in FY2023. The company has demonstrated its ability to generate robust returns over the last five years, as evidenced by its sales revenue, which has grown at a compound annual growth rate of approximately 29%.
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