Treasury Wine Estates has revealed why it is revisiting a demerger of its luxury and premium divisions, with a potential brand sell off also on the table.
The luxury division is led by Penfolds, while the premium division features brands including Wynns, Pepperjack, Lindemans, Seppelt, Rawson’s Retreat, Squealing Pig and Wolf Blass.
“As announced to the market at our interim results in February, we are assessing the future operating model for our global portfolio of premium brands, with a determination to be made during this calendar year,” a spokesperson for TWE said.
The demerger was first touted in 2020 following the company undergoing a strategic review. However it was put on hold so TWE could focus on boosting trading performance during COVID-19, restructuring its US business and responding to the anti-dumping probe by China that led to punitive import tariffs crippling the Australian wine industry.
CEO Tim Ford told the Australian Financial Review a demerger would allow TWE to concentrate on its premium wines business, including the Penfolds label.
The newspaper reported last week that demand for Penfolds was expected to exceed supply globally following China lifting of tariffs on Australian wine.
Ford said that drinkers were opting for higher-priced brands, with wines in the under $10 to $15 a bottle price segment struggling.
“That’s where the consumer is going, that’s where the market is going,” Ford said.
Ford said that should a demerger take place, the company would focus on wines priced at $30 or more a bottle, with an eye to them making up “anywhere between 90 per cent to 100 per cent” of TWE’s business.
TWE acquires premium Marlborough vineyard