Treasury Wine Estates boss Tim Ford believes bringing skilled labour to Australia the biggest economic issue for 2022

Treasury Wine Estates boss Tim Ford has elevated the reopening of Australia to skilled labour as the key economic issue for 2022.

Tim Ford at the American Chamber of Commerce lunch on Monday: ‘We need to open up the country again.’ Picture: NCA NewsWire/Ian Currie

Treasury Wine Estates boss Tim Ford has elevated the reopening of Australia to skilled labour as the key economic issue for 2022, and dovetailed that with a national call for greater optimism as we recognise the Australian economy has done well and that many businesses have actually flourished during the pandemic.

No stranger to the pitfalls of doing business through Covid-19 after crippling Chinese tariffs shut out Treasury Wine from its biggest and most profitable market, Mr Ford said we were spending too long focusing on the negatives.

“We spend an inordinate amount of time focusing on the 5 per cent of things that are negative in this country,” Mr Ford told the American Chamber of Commerce lunch in Melbourne in his first keynote public address since being appointed CEO in mid 2020.

“ … From an employment perspective there’s been industries severely hit over the last two years, but there have been plenty that have done well.”

Now was the time to open international borders and bring in much needed workers, tourists and international students – the key economic issue for Australia next year.

“We need to make sure that we have that optimism, positive mindset and enable these businesses to continue to flourish,” he said. “We need to get people into this country – that is the key issue agenda item of 2022 to take advantage of the dynamics that exist.”

He said bars and restaurants were reopening but they couldn’t get staff.

“And from a logistics point of view, yes ships around the globe are causing people lots of problems, but we can’t get the transport drivers. So we need to open up the country again for the skilled labour … that is the most important, I think that is so important for this country.”

After the address to AmCham, Mr Ford told The Australian that opening up the economy to tourists and immigrants would build confidence, which “could only help the wine industry”. In his speech Mr Ford said the winemaker would continue to invest in new winegrowing regions around the globe and expand its offering for its flagship luxury brand Penfolds, but would not compromise on quality.

He said as the appeal of Australian wine had grown around the world, the winemaker had expanded into new markets and winemaking regions.

“Penfolds is … growing its presence in some of the finest winemaking regions in the world, while maintaining the distinctive Penfolds ‘thumb print’ characterised by a house style and a quality standard that is never compromised,” he said.

Penfolds has recently expanded into new wine styles including champagne and a spirit aimed at the Chinese market. With the Chinese government last year imposing crippling tariffs on Australian winemakers, the company has sought to own vineyards outside Australia and make more wine overseas.

“In 2019, it (Penfolds) launched a champagne in collaboration with French Champagne House Thiénot. In March this year the Penfolds California Collection was unveiled – more than 20 years in the making,” Mr Ford said.

“It received glowing reviews and has opened the door to grow the Penfolds Australia portfolio in the US also. More recently, we’ve purchased an additional winery and vineyards neighbouring our current site in Bordeaux.”

Mr Ford said the company’s French winemaking capacity would grow by about a third to produce merlot and cabernet sauvignon for the Penfolds Bin portfolio, with the majority for export.

And from August next year, Penfolds is combining its annual Australian, Californian and French releases into one global collection launch, allowing it to leverage the portfolios in different markets and capture key selling periods.

“Our expansion into new markets and winemaking regions has been under way for many years. It has given us an unrivalled competitive advantage and is crucial to withstand macro environment shocks and drive growth,” he said.

Treasury Wine last month unveiled its latest offshore expansion with the acquisition of Napa Valley’s Frank Family Vineyards for $US315m ($434m).

Mr Ford said Treasury Wine’s diversified business model had demonstrated its strength, no more so than during the challenges of 2020 and 2021.

“Pre-pandemic, we were seeing good growth across on-premise (such as restaurants, bars, and pubs), cellar doors, and travel retail. That all changed – and quickly. At one stage, all of these channels were closed or disrupted, globally.

“However, with the bad comes the good and with these key channels shut off, we saw new trends take off and we made the most of them. The pandemic fundamentally changed the way people purchase wine. We saw a sharp increase in wine e-commerce and digital engagement driven by in-home consumption and consumers prioritising speed and convenience. And we’re seeing the US lead the way.

“According to the International Wine and Spirits Record, the US is forecast to become the world’s largest alcohol e-commerce market by the end of this year. Pre-pandemic, online wine sales only accounted for 2 per cent of the overall wine sales in the US. Fast forward to the ‘stay-at-home’ orders and online wine purchases boomed – there was a 167 per cent increase in online alcohol sales in the US in 2020, according to Nielsen.”

Mr Ford said Treasury Wine still had Chinese ambitions, despite the tariffs. “What we have done is adapted our plans and reshaped what the future looks like in this market – and it is still a very bright future.”

Treasury Wine shares fell 19c to $11.60.