Treasury Wine Estates will sell off its Commercial brand portfolio including Wolf Blass, Yellowglen, Lindeman‘s and Blossom Hill.
TWE has also announced that it will recognise a non-cash 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 (TPD) division.
“As announced at its F24 half year results in February, TWE has been assessing the future operating model for its global portfolio of Premium Brands,” an ASX statement says.
“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.
“Following the latest review of the carrying value of the Group’s assets as part of its annual impairment testing process, TWE will recognise a non-cash impairment charge of $354 million ($290 million post-tax) in its financial result for the year ended 30 June 2024 in relation to the TPB division.
“This impairment will be treated as a material item and relates primarily to the write-down of goodwill ($115 million) and brands ($229 million), predominantly Commercial brands, including Wolf Blass (acquired 1996), Yellowglen (acquired 1996), Lindeman’s (acquired 2005), and Blossom Hill (acquired 2015).
“In F24, the contribution of these Commercial brands represented less than five percent of TWE Group’s gross profit.
“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.
“These adverse trends have 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 considers Commercial brands below A$10, Premium brands A$10-30 and Luxury brands A$30+.
The full year results will be released on 15 August.