Treasury Wine May Sell Beringer, Sterling Vineyards, Etude Winery

prioritize, including Penfolds, Daou and Napa Valley's Beaulieu, Frank Family Vineyard and Stag's Leap Winery.

Beringer, founded in 1876 by brothers Jacob and Frederick Beeringer, was not among the 10 brands mentioned. Nor was Sterling Vineyards, founded in 1964 by Peter Newton and Michael Stone, nor Etude, founded in 1982.

Six months ago, Treasury suspended dividends and announced a $450 million writedown of its U.S. business. Those actions followed the 2021 acquisition of Frank Family Vineyards for $315 million and nearly $1 billion for Daou in 2023. It's also wrapping up a major transformation of Beaulieu Vineyard this summer.

At an investor's day presentation Thursday (6/4), CEO Sam Fischer said the company was going to focus "on where we'll win." He expressed confidence wine will continue to play a meaningful role in the lives of consumers and asserted luxury wine remains an attractive segment driven by premiumization. In support of this, he said the luxury tier of the global total wine market is expected to grow 1.1% by 2030, while the premium share is expected to ease 0.2% and the commercial segment is expected to decline 0.5%.

He also noted that lighter styles are expected to accelerate their share gains within the wine category, and noted lighter styles had grown to 30% of the category last year from 28% in fiscal 2023. Moderation presents a meaningful long-term growth platform, he said, adding NoLo wines in 2026 are expected to represent $3.3 billion AD, up from$2.2 billion in 2023.

So, the company is going to focus on producing luxury red and white wines and emphasizinge lighter, flavor-led wine experiences enabling moderation, new occasions and extend TWE's brands, Fischer said.

He then said Cabernet Shiraz, Cabernet Pinot Noir, Cabernet Shiraz Pinot Noir, Chardonnay Sauvignon Blanc Champagne, Sauvignon Blanc, Chardonnay Sauvignon Blanc, Chardonnay Sparkling, Pinot Grigio, Sauvignon Blanc Spritz and Sauvignon Blanc Rose will be the focus varietal.

Fischer saw the "better for you" market as being in the U.S., Australia and U.K., but wasn't specific about alcohol styles other than to say low-alcohol would be the focus in the U.S. and Australia with Low and No Alcohol Rose and Sauvignon Blanc in the UK.

Penfolds, Daou, Wynn all align with"strengthen our Luxury Red leadership" he said. He described Penfolds, Daou and Matua as TWE's "Power Brands," while calling Frank Framiy, Beaulieu Vineyards, Stags Leap, Squaling Pig, Wynns, Pepperjack and Coldstream Hills "regional heroes.

Fischer said he expects power brands and regional heroes to account for 90% of group net sales revenue. This will result in cutting TWE's number of brands to 30 from 76, and will be accomplished in four ways. The first is to progressively reduce production and sales, the second is to divest brands and supporting assets "to release capital, support deleveraging and improve return on capital, the third is to maintain a specific brand in a specific market but not detract from focus, and the fourth is to halt production of a brand and run down its inventory.

Operations

In terms of operations, Fischer repeated the MBA formula, assuring investors there would be faster, more effective decisions, accountability for deliverry against clearly defined targets and "discipline execution metric tracked in real-time. driving greater visibility and faster intervention."metrics He said there will be supply chain changes to, among other things, "improve capital efficiency through divestment of surplus vineyards and wineries."

Finances

The executive said key brands have regained momentum in key markets, noting the Penfolds depletions are up in all key market and U.S. luxury depletions are up 9% through the company's fiscal third quarter. The company has finalized a "clear path to returning leverage to target, below 2x by fiscal 2028, and the plan has strong support from global lenders, with $300 million in additional commitments established.

Finally, he said, the company is pursuing a strategic and operation review in the Americas. Like everyone else, the Americas division is dealing with "elevated inventory." Another problem, Fischer said, is "excess supply chain capacity – vineyards, wineries and packaging."

So, it's conducting a "strategic review" of the Americas business. That means its looking to sell off vineyards and wineries. If you're interested in buying a winery with a storied past, give Treasury Wine Estates a call.

Near-Term Outlook

TWE's problems can be traced to a trade dispute with China, and thee was no indication in the presentation that any serious changes are being taken to lessen the company's dependence on China.