TWE to Dispose Wolf Blass And Lower-end Wines

Treasury Wine Estates, the parent company of Penfolds, is looking to sell off its lower-end wine range including Wolf Blass, Lindenman’s amid declining global wine consumption.

The decision was announced by TWE on Tuesday as part of its structure review that it has been working for six months. The sale aims to divest its low-end commercial brands and focus the group’s strategy on higher-end wine ranges as consumers’ taste upgrades.

The four brands on sale – Wolf Blass, Blossom Hill, Lindeman’s and Yellowglen – only account for 5% of TWE’s profit, while its flagship brand Penfolds alone contributes about 75% of the group’s profit.  

According to the group, it would book a AU$290mn non-cash writedown on the value of its commercial business in annual results due to be announced on August 15.  

The sell-off comes at a difficult time for Australian wine industry, which is grappling with a wine glut. Even with the reopening of China market, it would take at least two years to deplete as we have previously reported. This problem is exacerbated by a global decline in wine consumption.

The off-loading also follows earlier news report of Pernod Ricard wine sale.  The French wine and spirits giant has sold off its Australian, New Zealand, and Spanish wine businesses including popular brand Jacob’s Creek to Australian’s second biggest wine producer Accolade Wines to focus on its more profitable spirits  business.  

Since China lifted tariffs on Australian wine in late March, exports to China have surged. In the three months that followed, its exports surged to US$163.5 million, up by 35956.8% compared with the same period last year. The influx of Australian wines is primarily led by Penfolds.

Other than the increased exports to China, Australian wine exports have hit record low, as warned by Wine Australia, the country’s official wine trade body.

 “Global trading conditions remain very challenging with wine consumption continuing to fall in many markets around the world due to moderation trends and cost of living pressures. There are also enduring problems in shipping, with a shortage of ships globally and freight and charter rates on the rise,” noted Wine Australia Manager, Market Insights, Peter Bailey.