TWE announced this morning that it has licensed its commercial Beringer brands in the United States to The Wine Group.
The company said Beringer remains a core brand within the TWE portfolio and there is no intention for it to dispose of the brand as part of this or any future transactions.
Under the terms of the long-term licensing agreement, The Wine Group will source and sell the Beringer Main & Vine, Beringer Founders’ Estate, Coastal Estates and Meridian brands in the Americas. In the six-month period to December 31, 2020, these brands contributed 2.3million cases of volume, $92 million of net sales revenue (NSR) and $13.5million of gross profit to the company.
The Wine Group will acquire existing inventories associated with these brands on a progressive drawdown basis and will assume responsibility for related future bulk wine supply contracts.
It follows Treasury Wine Estates shares jumping by more than 7% on Monday, following unconfirmed rumours that it had received a takeover bid from Pernod Ricard, as reported by The Drinks Business.
TWE CEO Tim Ford said: “We are delighted to be entering into this long-term transaction with The Wine Group, which will be of mutual long-term benefit to our respective organisations. For TWE, this transaction is a significant milestone towards our plans to deliver the future state premium US wine business and we can now focus solely on continuing the growth of our premium brand portfolio to drive future performance in the Americas.”
Cate Hardy, CEO of The Wine Group, added: “The Wine Group is a leader in the industry with strong wine brands that deliver unbeatable value. The acquisition of these popular brands further positions The Wine Group as a global leader in wine. Adding these brands complements TWG’s leadership in the value segment along side our growing portfolio of premium wines, introducing more consumers to our high quality wines at every price point.”
As outlined at its 1H21 results announcement, TWE is implementing plans intended to deliver a premium focused business in the Americas with broadly half the volume, similar earnings over time and progress towards the target regional EBITS margin of 25%.
TWE expects to generate one-off net cash inflow of at least $300million as part of these plans. It said today’s announcement will generate cash proceeds of approximately $100million, describing it as a “meaningful step towards these goals”.
Inside the Treasury Wine Estates restructure
Penfolds releases first Californian wines
In February, Penfolds released its inaugural California Collection of four wines: 2018 Quantum Bin 98 Cabernet Sauvignon; 2018 Bin 149 Cabernet Sauvignon; 2018 Bin 704 Cabernet Sauvignon and 2018 Bin 600 Cabernet Shiraz.
Penfolds Chief Winemaker Peter Gago said: “A quality-first approach underpins this inaugural release, led by 2018 Quantum. This blend assembles parcels of prized cabernet sauvignon from some of the Napa Valley’s best vineyards and pedigreed shiraz from South Australia. This is a first for Penfolds.”
Penfolds’ California journey started decades ago in the Camatta Hills vineyard, Paso Robles. In the 1980’s, Penfolds initiated a viticultural program in Australia called ‘Heritage Selections’. From its most prized vineyards, winemakers sought to identify single vineyards, blocks and vines that produced the best quality fruit. Cuttings from these exceptional Heritage Selections were then propagated and eventually sent across the world to California.
During 1998 – 1999, a selection of Magill Estate and Kalimna Heritage Selection vines were planted in Californian soil, at Block 30 of the newly purchased Camatta Hills Estate, Paso Robles. Formerly known as Creston 600 Ranch.The 11.5-acre Block 30 (the original and most prized block on the Estate) was fully propagated and planted by 2001. While planting the vineyards, viticulturists discovered another bonus: prized limestone or, in geological terms, “Camatta” soils – hence, the name “Camatta Hills”.
While experimental Camatta Hills vintages occurred in 2006 and 2007, the bottles were never commercially released by Penfolds. More recently in 2018, Gago, Senior Winemaker Stephanie Dutton and Winemaker Andrew Baldwin reestablished Penfolds footprint within the northern hemisphere and embarked on the 2018 California harvest.
Over the past three years, Penfolds has sourced grapes from some of the best Californian vineyards to complement Penfolds House Style and deliver exceptional and distinctive quality wine. Winemakers spent time meticulously selecting fruit from Californian vineyards including Napa Valley AVAs: Oakville, Diamond Mountain District, Howell Mountain and Rutherford. Grapes were also sourced from Camatta Hills, Paso Robles, from the original vine cuttings planted in 1998 and 1999.
“The wines made in California pay respect to California terroir, yet one thing remains overtly consistent … the red Penfolds stamp has been applied,” Gago said.
“Being global isn’t just about selling wine around the world, it is about working with both feet on the soil. We will have the Californian sun above and soil beneath, but everything in between will be Penfolds.”