Treasury Wine Estates will reduce its portfolio of 76 brands to less than 30 over time, focusing on brands with the strongest long-term growth opportunities and consumer relevance.
The company will focus on the ‘Power Brands’ Penfolds, DAOU and Matua – complemented by ‘Regional Heroes’ including Frank Family Vineyards, Beaulieu Vineyard, Stags’ Leap Winery, Wynns, Squealing Pig, Pepperjack, and Coldstream Hills which will continue to play an important role in key local markets.
TWE expects these 10 brands to contribute around 90 percent of group net sales revenue within five years.
It is not yet known which brands will be shelved.
The company also says there will be “potential divestment, retirement or optimisation” of selected assets – primarily in California and Australia – to improve operational efficiency.
TWE CEO Sam Fischer says the company aims to become a simpler and more focused luxury wine business, investing in fewer, stronger brands while increasing its emphasis on lighter styles and no- and low-alcohol wines.
“We have some of the world’s most recognised wine brands, outstanding vineyards and winemaking assets, deep expertise from grape to glass, and strong customer relationships across global markets,” Mr Fischer said at an investor day today.
“Wine continues to play an important role in consumers’ lives, but consumer preferences and market dynamics are changing.
“The future belongs to wine businesses that are more focused, agile and closely aligned to where consumers and customers are heading.”
Mr Fischer said TWE’s transformation was designed around the trends shaping the future of global wine.
“Premiumisation remains a powerful long-term trend, with consumers increasingly choosing to drink less but better,” he said.
“At the same time, we’re also seeing strong growth in lighter styles, more relaxed social occasions and moderation trends, particularly among younger consumers.
“We’re reshaping Treasury Wine Estates to where we see the strongest long-term demand and growth opportunities in luxury red, luxury white, and more contemporary wine experiences.”
The ‘Power Brands’ – Penfolds, DAOU and Matua – will receive increased investment and support to accelerate growth across multiple markets from F28.
These will be complemented by ‘Regional Heroes’ including Frank Family Vineyards, Beaulieu Vineyard, Stags’ Leap Winery, Wynns, Squealing Pig, Pepperjack, and Coldstream Hills which will continue to play an important role in key local markets.
Over time, TWE expects its portfolio to reduce from 76 brands to less than 30, allowing it to concentrate investment behind the brands with the strongest long-term growth opportunities and consumer relevance.
“Penfolds continues to define modern luxury wine globally, DAOU has reshaped luxury Cabernet for a new generation of consumers, and Matua continues to lead refreshment-led wine occasions through strong cultural relevance and innovation,” Mr Fischer said.
“This sharper focus allows us to invest more behind the brands, innovation and consumer experiences that will be the engine of TWE’s future growth.”
Many of the brands outside TWE’s future-state portfolio will continue to play an important role in supporting customer needs, key markets and production scale during the multi-year transition period.
In support of a more focused portfolio, TWE will continue work underway to simplify its operating footprint – primarily across its production regions in the US and Australia.
This includes the potential divestment, retirement or optimisation of selected assets – primarily in California and Australia – to improve operational efficiency and ensure the business is better aligned to future consumer demand.
TWE chief supply and sustainability officer Kerrin Petty said the wine industry continues to navigate structural challenges, including changing consumer preferences and excess supply in some commercial wine segments, and TWE’s supply transformation would better align the business to future demand.
“We’re responding proactively and responsibly by aligning our footprint and asset utilisation to future demand expectations while continuing to protect the quality, flexibility and reliability our customers expect,” Mr Petty said.
“The transformation of our supply chain directly supports our investment in the brands and opportunities where we see the strongest long-term growth potential, while supporting a healthy balance between supply and demand in the industry over time.”
TWE has also commenced a strategic and operational review of its Americas business.
While the company continues to see attractive long-term opportunities in the region, elevated inventory levels and excess supply chain capacity are challenging overall operating performance.
The review will consider a range of options to improve performance and shareholder value.
TWE Ascent is a multi-year transformation program with changes expected to be implemented progressively from F27 over several years as the business transitions toward its future-state portfolio and operating model.
Mr Fischer said TWE remained committed to supporting team members, customers and partners throughout the transition.
“TWE’s transformation program is designed to position TWE for long-term sustainable growth by creating a more focused portfolio, a simpler and more efficient operating model, and stronger alignment to evolving consumer preferences globally,” he said.
“The future of wine will be shaped by brands that stay closely connected to consumers, lead with innovation and continue creating meaningful wine experiences and that’s the future Treasury Wine Estates is building.”
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