TWE to reduce brands
Treasury Wine Estates, which has a Barossa base at Stockwell, is the latest conglomerate to announce a contraction in its portfolio, with a plan to reduce its stable of 76 wine brands to less than 30 "over time".
Treasury Wine Estates, which has a Barossa base at Stockwell, is the latest conglomerate to announce a contraction in its portfolio, with a plan to reduce its stable of 76 wine brands to less than 30 "over time".
Treasury Wine Estate's Chief Executive Officer Sam Fischer said yesterday the 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.”
TWE advised it will become more focussed on ‘Power Brands’ and ‘Regional Heroes’.
In the future, the ‘Power Brands’ – Penfolds, DAOU and Matua – will receive increased investment and support to accelerate growth across multiple markets.
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.
TWE expects these 10 brands to contribute around 90 per cent of Group Net Sales Revenue within five years.
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.
It will continue work underway to simplify its operating footprint, including 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."
The news comes just a week after Endeavour Group announced it will continue Vinpac at Angaston but consolidate its wine operations from seven sites to three.
