Treasury Wine Cutting Costs in Premium Brands Unit

The cuts may affect such well-known labels as Squealing Pig, Wolf Blass, Lindermans, Pepperjack, Wynns, Seppelt and 19 Crimes.

Tim Ford, CEO, Treasury Wine Estates CEO, said the cuts are a result of a change in consumer spending in both Australian and overseas markets.  

Last month, Wine Australia's Export Report reported that while exports in all price segments below $10 per liter declined in value, exports above $10 were stable.  

The top five export destinations by value were:

  • US (down eight per cent to $381 million. 20 per cent value share of total export value)
  • UK (down 20 per cent to $359 million. 19 per cent share of total export value)
  • Hong Kong (down one per cent to $182 million. 10 per cent share of total export value)
  • Canada (up two per cent to $174 million. Nine per cent share of total export value), and
  • Singapore (down 20 per cent to $134 million. Seven per cent share of total export value).

The top five export destinations by volume were:

  • UK (down 16 per cent to 208 million litres. 33 per cent share of total export volume)
  • US (up 15 per cent to 146 million litres. 24 per cent share of total export volume)
  • Canada (up 44 per cent to 73 million litres. 12 per cent share of total export volume)
  • New Zealand (down 16 per cent to 28 million litres. Four per cent share of total export volume), and
  • Germany (down 17 per cent to 28 million litres. Four per cent share of total export volume).

ISWR in April reported that cutting back on alcohol purchases was the second most popular strategy consumers are using to save money, buying less but better quality (and more expensive) wine.  This was especially true in the UK, Germany and Australia, where inflation has been rising sharply.

Comment: If consumers really are buying less alcohol beverages but paying more for them, this is a major change in consumer behavior.  In past periods of economic uncertainty, consumers have tended to purchase the same quantity of product, but at lower price points.