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Treasury brings second-tier brands into the limelight

Published:  17 November, 2015

Treasury Wine Estates is to invest in building its smaller regional brands, chief executive Michael Clarke told shareholders at the company's AGM in Adelaide last week.

Describing them as "regional gems", Clarke described them as "brands that have a very strong consumer following, but are not scalable or of sufficient size to become global, umbrella brands."

Brands included in the 13-strong portfolio include T'Gallant, Coldstream Hills, Leo Buring and Devil's Lair.

"You have heard me talk about the potential to cluster vineyards, wineries and teams in order to deliver enhanced returns," Clarke said.

"We are executing on this and we have now formed a dedicated team focused on this portfolio of gems. We intend to provide these brands with focus and the investment they deserve as some of Australia's greatest regional wines.

"We are confident that this new way of managing smaller, but very valuable brands will drive margin accretion as well as delivering efficiencies to our capital employed."

By creating a specialist team to focus on these brands, Clarke believes the company can streamline costs and build greater value.

"We're putting A-players against this," Clarke told Australian media. "There are limitations on how big they can become, but they're very valuable."

Treasury's priority brand portfolio, which includes Penfold's, Wolf Blass and Stag's Leap, posted 13% sales growth in the last financial year.

Prior to the AGM, Treasury also announced that chief finance officer Tony Reeves is to leave the company.

Reeves is to be replaced by Noel Meehan, whose experience includes eight years at mining and explosives multinational Orica as CFO.

Meehan takes over the role at Treasury on January 1, 2016. Reeves will leave on January 31.

Mr Meehan will lead TWE's global finance and IT functions from TWE's Melbourne headquarters.

Clarke described Reeves as "a consummate professional who has played an integral role in helping me rebuild TWE into the strong company it is today".

Regarding Meehan's appointment, he said: "I am delighted to be able to bring someone with Noel's considerable talents and capabilities into the team at TWE.

"With the acquisition of Diageo's US and UK wine businesses due to be integrated into TWE with effect from January 1, 2016 it is the perfect time for a new CFO to help advance the next stage of the company's growth and development."