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TWE announces consolidation in its US and Australian supply chain

Published:  31 March, 2015

Treasury Wine is making "significant changes" to optimise its supply chain and cut overheads, it announced today.

The Australian wine producer is consolidating facilities in the USA and Australia which it says offer a further opportunity to reduce its overhead cost base and will build on its "turnaround" interim 2015 results.

It is consolidating production in the USA and Australia and both its Sonama County winery TWE Asti, and packaging and warehousing facility at Karadoc in Victoria that are "surplus to requirements".

Asti's production will be transferred to other wineries which have capacity, primarily Paso Robles winery, for the commercial brands, and Beringer winery for its luxury wines. The brand said this would also underline its separate focus on its luxury and 'masstige' brands Packaging at TWE's Napa Bottling Centre are also set to be consolidated.

In Australia, the close of Karadoc during the 2016 financial year, will boost utilisation of its Wolf Blass packaging and warehouse facility in the Barossa Valley.

In March, TWE chief executive Michael Clark told the Australian press the company was considering a range of options to free up resources to invest into its brands or in acquisitions that will deliver better returns. The company has concentrated on exiting unprofitable commercial sales volume, and increasing the amount of masstige and luxury wines it sells and announced it had turned a corner, despite challenging times over the last 18 months.

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%, which the company said reflected an $80.5 million tax benefit recognised in the prior period.