South Australian vineyard sell off for TWE

Treasury Wine Estates has put more than 1000ha of South Australian vineyard properties on the market as part of the restructuring of its business.

The sale includes a 488ha property near Bordertown in South Australia’s Limestone Coast region, comprising more than 374ha of vineyards, making it one of the largest in the region. The vineyard was the first to be established in the area in 1989 by Penfolds. It produces grape varieties for Cabernet Sauvignon, Chardonnay, Merlot, Shiraz, and Tempranillo.

The property is expected to attract offers of around $9million.

Colliers Agribusiness’s Tim Altschwager, who is managing the sale of the Bordertown vineyard, told The Property Tribune: “This is an exceptional chance to acquire a large-scale, commercial vineyard in the Bordertown wine region, a highly regarded viticultural area in South Australia.

“It is a significant vineyard by any measure. Imagine, should the Chinese market reopen, then large-scale commercial vineyards, such as Bordertown Vineyards, assume even greater importance.”

An additional four sites in Langhorne Creek are also being prepared for sale, offering about 400ha of planted vines across 520ha of total land area.

Chief supply officer Kerrin Petty told The Australian: “We continually review our global vineyard assets to make sure they’re set up to deliver on our strategy to grow our premium and luxury portfolio.

“Last year we acquired Beenak Vineyard in Victoria’s Yarra Valley, as well as Château Lanessan in Bordeaux.

“Right-sizing our sourcing footprint has also meant divesting some assets, including our vineyards in Bordertown and Langhorne Creek, South Australia.”

TWE sold Langhorne Creek’s Metala winery and vineyard last year to the family that originally established the historic vineyard in 1891.

Expressions of interest close on July 13.

Changing consumer preferences drive restructure

When TWE announces its next set of results in July the company will be at the half-way point of the five-year strategy CEO Tim Ford set in 2020, when China imposed prohibitive tariffs on Australian wines.

Those tariffs continue to be punishing for TWE’s bottom line, with Ford confirming to The Australian Financial Review in May that a review of the business was under way.

“Like any business, we continually assess our structure and cost base to make sure we’re in the right position to continue to deliver on our strategy,” he said.

“We’re now at the halfway point of our five-year strategy and faced with changing consumer preferences and economic uncertainty in major markets, we’re reviewing the structure in our Treasury Premium Brands division, as well as some other parts of our business.”

Treasury Premium Brands division includes brands such as Wolf Blass, Lindemans, Squealing Pig, Pepperjack, Wynns, Seppelt and 19 Crimes.

The company declined to comment to the AFR on whether jobs would be affected by the review, saying it was at an early stage.

The restructure will put more emphasis on TWE’s luxury wine segment.

F23 performance outlook

In an announcement to the ASX last month, TWE said it was undertaking a review of its commercial wine supply chain, particularly in Australia, with a focus on improving operational flexibility and reducing total network cost to improve
cost of goods sold.

It also said it was exploring divestiture and/or rationalisation of selected assets, either individually or in combination.

“Consumer demand for Luxury wine remains strong in all markets globally, with Luxury sales in the Penfolds, Treasury Americas and Treasury Premium Brands divisions in line with expectations,” TWE said.

“Penfolds, in particular, continues to deliver strong momentum in building distribution and consumer demand across a number of key global markets.

“Category consumption trends for entry-level Premium wine in the United States remain challenging and have shown signs of further deterioration in recent months. Specifically, the 19 Crimes portfolio has continued to perform below expectations.”

As a result, TWE NSR was expected decline by approximately 2-3% compared to FY22.

Ford said: “We continually and proactively assess our business performance, our structure and our cost base to make sure we’re in the best position to continue to deliver on our premiumisation and growth strategy. With changing consumer preferences and a tightening economic environment in most major markets, we’re taking the opportunity to make changes in our business now, so we have increased flexibility in the future to continue to grow our Premium and Luxury

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