Wall Street rises as materials and crypto stocks offset continued bond sell-off
June 4 (Reuters) - Australia’s Treasury Wine Estates is doubling down on a handful of brands including Penfolds and reviewing its troubled Americas business as part of a plan to cut costs and rebuild investor confidence.
The maker of Penfolds luxury red wine said on Thursday it would simplify its portfolio by focusing on "Regional Heroes" and "Power Brands" and cutting the number of brands to fewer than 30 over five years from the current 76.
Treasury Wine is also targeting to save costs of about A$100 million ($71.33 million) a year from a revamped operating model and a supply-chain overhaul.
The three power brands - Penfolds, DAOU and Matua - currently account for just 25% of volume but generate 54% of net sales revenue.
Under the new plan, this segment will receive the majority share of advertising and promotional investment, targeted at 12% of net sales revenue.
For the Americas business, Treasury Wine flagged two key challenges: elevated inventory from recent vintages and excess supply-chain capacity across vineyards, wineries and packaging.
Australia’s standalone winemaker said it plans to divest its Paso Robles and San Luis Obispo wineries, exit vineyard leases across Napa Valley, Sonoma and the Central Coast, and consolidate U.S. luxury production at its St Helena Winery.
The Americas division has been a drag on group performance, hit by softer wine demand and disruptions stemming from changes to its distribution network.
Treasury Wine has increasingly leaned on its luxury portfolio led by Penfolds, a flagship premium red wine label with strong pricing power in key markets, to support earnings and margins.
Shares of the company rose as much as 12.6% to A$4.640, their highest since May 25, and were headed for their best session since April 22.
Treasury Wine expects earnings before interest and taxes and SGARA items to be in the range of A$480 million to A$490 million in 2026, compared with A$770.3 million in the previous year.
($1 = 1.4019 Australian dollars)
