Treasury again considering wine brand divestment

Luxury and premium wine maker Treasury Wine Estates is again taking the microscope to its operations and plethora of wine brands seeking efficiencies and potentially selling off more wine brands.

The company has been undergoing a process of what it calls premiumisation since the shock of the imposition of import tariffs by China on its operation, selling off ‘commercial’ wine brands and focusing on luxury brand Penfolds and premium, higher margin wines.

TWE considers Wynns, Pepperjack, Squealing Pig and 19 Crimes to be among its premium brands.

However the company makes numerous wine brands including Wolf Blass, Lindemans, Seppelt, St Hubert’s The Stag, Blossom Hill and Matua in Australia, as well as wines sourced from its global network of vineyards.

The company said that the contribution from premium and luxury brands to net sales revenue (NSR) had risen by 13 percent to more than 60 percent since it began the premiumisation process.

This had driven NSR per case and EBITS margin ‘reflecting the success to date of the premiumisation focus’.

Treasury told investors it would undertake a review of the commercial wine supply chain, particularly in Australia, with a focus on improving operational flexibility and reducing total costs.

It will also explore ‘divestiture and/or rationalisation of selected assets, either individually or in combination’.

“The market trends and consumption outlook for commercial wine, however, remains challenged, most notably in Australia and the UK.

“In recent years, this has led to further declines in (Treasury’s) lower margin commercial portfolio volumes, a market dynamic that is expected to continue in the future.”

The company said it would deliver a further update on its initiatives including timelines, financial impacts and one-off costs as part of TWE’s F23 full year results announcement in August.”

Picture: Treasury Wine Estates