Penfolds owner, Treasury Wine Estates (TWE), has informed investors of a raft of changes it plans to make, following a period of heavy losses.
These changes are designed to bring $100 million in savings each year. They include the winding down of “non-priority” brands and a full-scale review of the business’s presence in the US.
It comes after TWE recorded a near-$650 million loss in its fiscal first-half. At the same time, its flagship brand Penfolds saw a 19.6 per cent dip in sales.
The new-look brand portfolio will be formed on three principles: luxury red wine, luxury white wine, and “modern refreshment” wines. The group earmarked three brands as its designated “power brands”, which it plans to increase investment in, in a bid to drive faster growth. These brands are Penfolds, Daou, and Matua.
Remaining “non-priority” brands will see production and sales gradually reduced, TWE said, before they are either divested or retired. The portfolio reduction will see a 76-strong portfolio reduced to less than 30 brands.
In the US, softening demand has prompted TWE’s call for a review, which will see inventory levels, supply chain capacity, and its vineyards assessed to determine whether they are in excess.
All of these changes are expected to return TWE to growing revenue by fiscal 2028, with one-off costs between $220 million and $260 million incurred through the supply chain optimisation in the US.
