Endeavour Group has announced it will restructure Pinnacle Drinks and its premium wine portfolio, reshaping the business as an “asset-light, customer-led” portfolio.
Among the actions will be:
- Concentrating investment on high-performing brands with proven retail demand
- Reduce its own grape production by more than 80%
- Streamlining production and packaging to a smaller number of high-scale sites
The Group said that following a detailed review of its premium wine portfolio, it will exit or sell non-core winery and agricultural assets.
Winery operations will be consolidated from seven sites to three, retaining Cape Mentelle in the Margaret River, Isabel Estate in the Marlborough region of New Zealand and Dorrien Estate in the Barossa Valley.
A single high-scale packaging facility will be retained at Vinpac Angaston in the Barossa Valley, with the Vinpac McLaren Vale bottling facility to close later this calendar year.
Endeavour Group will seek a new owner for the award-winning Oakridge brand and operation in the Yarra Valley; The Chapel Hill, Riddoch Coonawarra and Krondorf Barossa brands will be retained, but their vineyards and physical assets will be sold. Chapel Hill operations will close at the end of June.
Endeavour does not intend to renew its lease of Josef Chromy. Assets associated with the business are under review and a decision will be made before the end of the lease; and the domestic Pinnacle product range will be further rationalised, sharpening focus on the brands with the strongest retail demand and customer engagement.
Endeavour Group Managing Director and Chief Executive Officer Jayne Hrdlicka (above) said: “Today’s decisions reflect a clear choice to refocus Pinnacle on its primary role – serving our retail businesses and the customers that drive growth.
”By concentrating on the brands and assets that customers value most, we are building a more focused private label portfolio.”
Hrdlicka vows to show investors the money
Endeavour Group held an Investor Day on May 27, detailing the results of a detailed strategic review led by Hrdlicka on behalf of the Board.
It has identified three priority areas to position the business for growth:
- Reset multi-brand Retail strategy: Growing Retail revenue by reinforcing price leadership in Dan Murphy’s and repositioning both Dan Murphy’s and BWS to better meet the needs of their unique customer segments.
- Unlock growth potential in hotels: A review of the Group’s hotels portfolio has identified a significant opportunity to improve the performance of the business by simplifying the operating model and accelerating investment.
- Simplify operations and reduce costs: Management is actively working to reduce complexity in the business, drive out cost and optimise the asset base to improve returns and accelerate the Group’s transformation.
Hrdlicka said: “We examined the business through a number of lenses and have made the tough choices required to deliver the Group’s next phase of growth. With a disciplined focus on customer value, a targeted step-up in Hotel investment, a hard eye to cost and a simplified asset base, we have begun to execute our transformation.
“There is significant untapped potential in Australia’s best retail liquor brands and hotels, and we now have the roadmap in place to ensure that potential is fully realised for our customers and our shareholders.”
Hrdlicka told analysts she would deliver $300 million in savings by the end of FY29 and reverse the Group’s sliding share price.
“That is our intent to show you the money,” Hrdlicka said.