Treasury mulls sale of Australian bottling and winery processing facilities

By Arabella Mileham

Published: 02 March, 2015

Treasury Wine Estate is considering selling some of its wine processing infrastructure in Australia to free up resources to invest in its brands.

Treasury Wine Estate is considering selling some of its wine processing infrastructure in Australia to free up resources to invest into its brands.

Chief executive Michael Clarke told the Australian press it was not necessary to own the bottling and winery processing infrastructure facilities that lie idle for much of the year, and the company was considering the option of a sale and leaseback of these assets.

It is one of a range of options being considered by the company to liberate funds that can be invested in brands or in acquisitions that will deliver better returns, he said. Another possibility being considered is a long-term partnership with another wine company.

"It could be an alliance or partnership where we share an asset," Mr Clarke is quoted as saying.

The company has had an agreement with Accolade Wine since 2012, whereby TWE wines for the European market are bottled at Accolade's Bristol packing facility, Accolade Park, and Accolade's brands for the Australian market are bottled by TWE in Australia. Since 2013, TWE has also provides packaging and production services for several Accolade brands based in California.

Clarke was speaking as the company announced its six months results, which saw net sales rates up 6.2% and EBITS also rise 86.0% on a reported currency basis, despite profits down nearly 60%. The company said this reflected an $80.5 million tax benefit recognised in the prior period.

Michael Clarke said the company was making good progress in "resetting" the company, fixing its core business and setting up a sustainable future, but that this would take time.

It is continuing its strategy of focussing on premium and "masstige" brands - included Penfolds, Wynns, Beringer, Wolf Blass, Lindeman's, Etude, Chateau St Jean, Matua, Stags' Leap and Souverain - and Clarke said there are plans to launch a new super-premium proposition under the Penfold brand. However around 25 of its non-essential brands may be "retired" or sold, he said.

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