Treasury begins switch to premium US wine portfolio

Treasury Wine Estates, the maker of Penfolds wines, has moved towards a premium brand model for its extensive American multi-brand wine portfolio.

The company, which is wrestling with the fallout of China’s punitive tariffs against Australian wine imports, has reached a long-term licensing agreement with The Wine Group to take over several of TWE’s commercial tier brands.

The Wine Group originated within Coca-Cola Bottling of New York and owns a number of commercial wine brands in the US.

The agreement, which takes effect this week, will see The Wine Group source and sell the Beringer Main & Vine, Beringer Founders’ Estate, Coastal Estates and Meridian brands in the Americas.

The Wine Group will acquire existing inventories associated with the brands and will take over responsibility for future bulk wine supply contracts.

Treasury expects today’s announcement will generate cash proceeds of approximately $100 million.

The company plans to halve its US volumes focusing on premium wines in a strategy expected to net over time $300 million.

TWE CEO Tim Ford said the transaction would be of mutual benefit to the two parties.

Ford said: “For TWE this transaction is a significant milestone towards our plans to deliver the future state premium US wine business.

“We can now focus solely on continuing the growth of our premium brand portfolio to drive future performance in the Americas.”

Picture: Treasury Wine Estates/Beringer Vineyards, Nappa Valley

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