Penfolds maker in commercial wine brand selloff

The maker of Penfolds Treasury Wine Estates is to sell off its entire commercial wine brand portfolio as it continues to pursue a premium strategy for its wine offerings which offer higher margins and profits.

The company told investors that it would seek to sell commercial brands including Wolf Blass, Yellowglen, Lindeman’s and Blossom Hill.

In F24, the contribution of these Commercial brands represented less than 5 percent of TWE Group’s gross profit.

The company said: “TWE has been assessing the future operating model for its global portfolio of Premium Brands.

“As part of this review, TWE has determined that it will seek to divest its Commercial brand portfolio and will provide investors with a full update on its ongoing review of the future operating model for its global portfolio of Premium brands as part of the F24 full year results announcement.”

The company revealed it will recognise a noncash impairment charge of $290 million after tax in its F24 full year results, which will be treated as a material item in relation to the Treasury Premium Brands division.

“The changes to the carrying value assessment reflect moderated top-line expectations as a result of challenging market conditions for Commercial wine, across all markets, and the underperformance of TPB’s brands relative to the category at these Commercial price points.”

TWE said adverse trends had offset the benefits from TPB’s strategic focus to premiumise its portfolio, where it has delivered a three-year NSR CAGR of 10 percent for its priority Premium brands, which include Wynn’s, Pepperjack, Squealing Pig and 19 Crimes.

TWE also recognises a Luxury portfolio centres around Penfolds and its iconic Grange.

TWE’s unaudited EBITS before material items for F24 are expected to be $658.1 million, an increase of 12.8 percent on the previous corresponding period.

Picture: Lindeman’s