Treasury Wine Estates has lined up an AUD558.4m (US$394.6m) impairment charge as part of the ongoing “strategic and operational review of its Americas business”, specifically from its supply chain in the US.
A move to “rebalance” what the brand owner called “structural misalignment within its US supply chain” has been outlined in a stock exchange filing three days prior to the announcement of full-year results in fiscal 2026 (to the end of June) on Thursday (13 August). The Americas review, confirmed by Treasury at the start of June, was prompted by “a result of the softened demand outlook [in the US] communicated in December [that indicated] … excess supply chain capacity, particularly with respect to vineyards, wineries and packaging, and elevated levels of inventory from recent vintages”.
The non-cash charge will be joined by the “fallowing of vineyards to reduce annual grape intake” along with an inventory writedown of predominantly bulk wine.
Separate to the charge will be a further writedown on the asset-carrying values of Treasury’s Daou Vineyards – bought for approaching US$1bn in late 2023 – Frank Family Vineyards and Beaulieu Vineyard.
“All available options” remain in play for the group’s Americas portfolio, operating model and asset base, Treasury noted in the filing.
“As we announced in June, we are taking proactive and decisive action to align supply to a rigorous model of future demand against the backdrop of an evolving US wine market,” said CEO Sam Fischer. “Both our Ascent transformation programme and strategic review of potential options for the future of our US business are progressing well.
“The underlying momentum in our business remains positive, with our key brands delivering depletions growth ahead of their categories, led by Penfolds, Daou and Frank Family Vineyards … .”
In results for the first half of fiscal 2026 (to the end of December), announced in February, the Melbourne-headquartered brand owner posted a near-17% slide in year-on-year sales. The company warned at the start of the year that it will be impacted to the tune of around $65m in H2 after reaching a settlement with Republic National Distributing Co following the latter’s closure of its California operations.
RNDC has since filed for Chapter 11 bankruptcy.
