Treasury Wine Estates has announced plans to offload its cheaper ‘commercial’ wine brands, following the conclusion of a strategic review.
Among the AUD10 (US$6.50)-and-below brands to go up for sale are Blossom Hill, Lindeman’s, Wolf Blass and Yellowglen. The news comes six months after the Penfolds brand owner kicked off a review of its operating model, saying at the time it was “considering the future” of its ‘commercial’ wine reporting division.
The decision will result in a one-time non-cash impairment charge of AUD290m (US$188.7m) related to the value of the brands.
In a statement to the Australian Securities Exchange, the group said the portfolio accounted for less than 5% of its gross profits in fiscal 2024, to the end of June. Treasury noted that its decision to divest is due to “challenging market decisions for commercial wines across all markets”.
In contrast, Treasury’s “premium” portfolio, which includes Squealing Pig, 19 Crimes, Wynn’s and Pepperjack, has posted a combined sales CAGR of 10% over the past three years.
The company is yet to find a prospective buyer but added it will provide more details on its “ongoing review” following the release of fiscal 2024 results on Thursday next week (15 August).
Two months ago, Treasury warned that its shift towards making more of Penfolds varietals available globally would result in price rises from the start of July.
