Treasury Wine Estates has decided not to offload its portfolio of “commercial” wine brands after failing to bag a satisfactory offer.
In a statement today (13 February), the Australian group said the offers it had received for the range, which includes Wolf Blass and Yellowglen wines, “did not represent compelling value and therefore their retention is the best course of action”.
Treasury Wine Estates revealed its intention to sell the wines in August, as a result of a review of “the future operating model for its global portfolio of premium brands”.
According to an ASX filing at the time, the brands under review also included Lindeman’s, snapped up in 2005, and Blossom Hill, bought in 2015.
In Treasury Wine Estates’ 2024 fiscal year, its commercial brands made up under 5% of the company’s gross profit.
The Australian wine major announced its plans to keep its commercial portfolio alongside its first-half results for its fiscal 2025 year, a set of numbers that also included a profit warning.
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By GlobalDataTreasury Wine Estates now expects roughly A$780m ($498.1m) in EBITS for its fiscal 2025, which is the lower end of its former $780m to $810m guidance range.
The move was “driven primarily by reduced expectations for Treasury Premium Brands”, the group said in the statement.
In its first half, Treasury Wine Estates’ Treasury Premium Brands business saw its EBITS fall 29.9% to A$23m, while EBITS margin dropped 5.3ppts to 6.4%.
The declines were driven by “softness in consumer demand for wine at lower price points”, the company said. It also pointed to an “underperformance relative to the category and the cycling of a A$9.7m gain on sale of divested vineyard assets in the pcp [previous corresponding period]”.
Last August, the Penfolds brand owner outlined plans to consolidate its premium wine brands unit by merging its Treasury Premium Brands with Treasury Americas Premium portfolio into a new Global Premium Brands division.
The transition to the new division is expected to be complete by 1 July, Treasury Wine Estates said today. Angus Lilley, present managing director of Treasury Premium Brands, will head up the newly combined business.
Treasury Wine Estates’ first-half net sales revenue grew 20.2% and 20.5% in constant-currency terms at A$1.5bn. Total net profit after tax increased 32.5% on a reported basis and 33.9% on constant-currency basis to A$221M.
Group EBITS was up 35.1% on a reported basis and 35.6% on a constant-currency basis reaching A$391.4m, attributed to “strong Luxury portfolio growth in Penfolds and the contribution from Daou”. Treasury Wine Estates’ total EBITS margin grew 2.8ppts to 25.3%.
Total reported and constant-currency volumes increased 3.6% in the first-half period to 11.2 million nine-litre cases.
