Treasury Wine Estates reviewing affordable wine brands

·1-min read

Treasury Wine Estates says it is reviewing its underperforming affordable wine business with an eye to possibly selling or slimming it down.

The winemaker said on Thursday the trends and outlook for "commercial" wine - wine priced under $10 - remained challenging, particularly in the UK and Australia.

In addition, the current inflationary environment, in particular the cost of packaging material, is expected to put upward pressure on its cost of goods in 2023/24.

"With changing consumer preferences and a tightening economic environment in most major markets, we're taking the opportunity to make changes in our business now, so we have increased flexibility in the future to continue to grow our Premium and Luxury portfolios," said TWE chief executive Tim Ford.

In particular, Treasury said it would focus on its Wynns, Pepperjack, Squealing Pig and 19 Crimes brands in its Treasury Premium Wines division.

By process of elimination, therefore, one brand up for review would be Wolf Blass, bottles of which were selling for $7 at Dan Murphy's online on Thursday.

Treasury Wine Estates' Penfolds brand is a division unto itself and TWE said it had strong momentum, as does its luxury wines - those priced at more than $30.

But Treasury said sales of cheaper premium ($10-$30) wines in the United States, where Treasury divested its commercial portfolio two years ago, remain challenging, with 21 Crimes in particular selling below expectations.

Treasury said it expected its revenue to be down two to three per cent in 2022/23, but forecast its earnings would be up by around 11 to 13 per cent, to between $580m to $590m.

At 11.24 am AEST, TWE shares were down 5.4 per cent to a nine-month low of $12.075.