Plans by Treasury Wine Estates to pursue a demerger of Penfolds are on hold, the company said at the annual general meeting today.
“In respect of a potential Penfolds demerger, we continue to believe that incremental long-term value will be created from a separate focus for Penfolds and TWE’s other brand portfolios,” CEO Tim Ford said.
“We have decided to formally pause work on a demerger to focus on key priorities including trading through Covid, the US business restructuring and most specifically the MOFCOM investigation in China.
“Therefore, the previously announced timeline for implementation of the potential demerger by the end of calendar year 2021 is no longer applicable.
“However, we are continuing to actively assess internal operating model and structure options to deliver value through a more defined separate focus across our brand portfolios, and regional businesses, as the platform for the next phase of Treasury Wine Estates’ growth.”
Mr Ford said the ongoing investigations in China – and speculation about an imminent embargo on Australian exports including wine – did not change the company’s long-term commitment to China.
“We will continue to focus on building our brands in this market, and further developing the deep relationships we have with our customers and strategic partners,” he said.
“We welcome the opportunity to participate in this investigation directly, and the team is currently responding to detailed information requests by MOFCOM – we respect the process and will continue to full cooperate as these investigations continue.”
Mr Ford said TWE had continued to see strong recovery in consumer demand for its brands in China.
“Pleasingly, we also saw strong consumption throughout the Golden Week holiday season and mid-autumn festival in September and into early October, driven by outstanding brand building investment execution from our local team and the return of banquet and social gathering occasions,” he said.
Photo: Penfolds website.