Treasury Wine Estates moves to consolidate its US businesses

By Erin Smith

Published: 03 June, 2016

Following the acquisition of the bulk of Diageo's US and UK wine business for £390 million in October, Treasury Wine Estates announced today it would be restructuring the US business.

The changes are related to the supply and production side of the business which is in California. TWE wine brands from California include the famous Blossom Hill, Beringer, Chateau St Jean, Stags' Leap, Beaulieu Vineyards, Sterling Vineyards, Acacia, Provenance and Hewitt.

The changes will include the sale of Paicines winery, which is located on the central coast of California. The production of wine from the central coast will be consolidated to its Meridian winery facilities located in Paso Robles. Additionally a small number of vineyards will be sold off and winemaking at Chateau St Jean in Sonoma will be shut down and moved to the Beringer winemaking facilities in Napa.

Beaulieu Vineyard and Sterling Vineyards will focus on making premium-end wines while Beringer will be focusing on making wines the company calls 'masstige' wines. Masstige wines are mass market premium wines.

Many of the changes are in an effort to support further expansion into the Asian market.

The consolidation within the business is paying off as TWE posted strong half-year results in March. The company doubled its net profits and net sales revenue was up 22%. Much the growth was driven by volume growth in Asia, but also cost saving reductions.

Part of the cost savings has been driven by the closure of multiple sites across the company's different brands and move to consolidate its winemaking facilities where possible. The company announced it would be closing down two of its other wineries, Matua Winery in Auckland and Great Western Winery in Victoria, in October 2015.

TWE also announced it has sold its Auckland-based Matua Winery to family owned dairy business.

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