Treasury Wine Estates to divest four lower-tier wine brands

AUSTRALIA – Treasury Wine Estates (TWE), Australia’s largest wine producer, has announced plans to divest four of its lower-tier wine brands—Wolf Blass, Yellowglen, Lindeman’s, and Blossom Hill—as part of its ongoing premiumisation strategy.  

This move aligns with TWE’s focus on enhancing its portfolio of premium wines. 

The decision to sell these brands follows a review of TWE’s operating model, which the company revealed earlier this year.  

According to a statement to the Australian Securities Exchange, these four commercial brands, which fall into the price category below AUD10, contributed less than 5 percent of the group’s gross profit in fiscal 2024.  

The company cited “challenging market conditions for commercial wines across all markets” as a key factor in its decision. 

TWE’s premium wine segment, which includes brands such as Squealing Pig, 19 Crimes, Wynn’s, and Pepperjack, has experienced a compound annual growth rate (CAGR) of 10% over the past three years.  

The company’s shift towards premiumisation aims to capitalize on the growing demand for higher-priced wines. 

The statement did not specify potential buyers for the four brands but indicated that further details would be provided following the release of TWE’s full-year 2024 results on August 15.  

The company expects to report a cash impairment of A$229 million (US$148.37 million) related to the offloading of these brands and a write-down of A$115 million for goodwill. 

“The changes to the carrying value assessment reflect moderated top-line expectations due to challenging market conditions for Commercial wine and the underperformance of TPB’s brands at these price points,” TWE stated. 

TWE has been concentrating on its premium brands unit. In June, the Melbourne-based company integrated a new team focused on revenue growth into its premium-brands division.  

The team, led by Global Chief Revenue Growth Officer Angus Liley, was established in 2023 with the goal of driving revenue opportunities and innovation for TWE’s global brands. 

In July 2023, TWE also announced plans to close its Karadoc winery in Victoria, citing rising costs and decreased consumption of wines priced under AUD10.  

Additionally, the company indicated in June that its strategy to increase the global availability of Penfolds’ varietals would lead to price rises worldwide starting in July.