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Treasury Wine Estates

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Treasury Wine Estates Limited
Company typePublic
ASX: TWE
IndustryWinemaking
PredecessorFoster's Group
Founded2011
HeadquartersMelbourne, Australia
Key people
Tim Ford (CEO)
Products
  • Beringer
  • Wynns Coonawarra
  • Lindemans
  • Wolf Blass
  • Penfolds
Revenue
  • Increase A$2.5 billion (2017)
  • $A2.3 billion (2016)
  • Increase A$269 million (2017)
  • A$173 million (2016)
Number of employees
2500+
Websitewww.tweglobal.com

Treasury Wine Estates is an Australian global winemaking and distribution business with headquarters in Melbourne. It was formerly the wine division of international brewing company Foster's Group.[1]

History

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Background

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Treasury Wine Estates traces its roots back to the establishment of several New World wineries in the 19th century. These include Lindeman's and Penfolds in Australia, and Beringer Vineyards in the United States.

Foster's began to build its wine division from 1995 onwards. Through acquisition, it built the division into one of the world's largest winemakers. By 2005, Beringer Blass was the seventh largest producer of wine in the United States.[2] The same year, Fosters acquired the Australian wine-making group Southcorp, adding famous brands including Lindeman's, Penfolds and Rosemount, and around A$1 billion to revenues.[citation needed]

However, the wine division performed poorly, often draining cash from the highly profitable brewing business. In 2008, Foster's chief executive officer Trevor O'Hoy resigned.[3] By 2011, the company had written down the value of the wines division by half since it acquired it at the peak of the market, leaving it worth about A$3.1 billion.[4]

In 2022 it was ranked the largest Australian wine company by production,[5] and also the largest in terms of total revenue.[6]

Fosters Group brewing and wine split

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After further difficulties in the division resulted in an additional A$1.3 billion write-down, 99 per cent of Fosters Group shareholders agreed at a meeting in Melbourne in April 2011 to split Fosters Group business into separate brewing and wine companies. Treasury Wine Estates officially became a separately listed company the following month, with David Dearie as its CEO.[7]

Further write-down of stock worth around A$160 million took place in 2013, followed by the redundancy of David Dearie and the appointment of interim chief executive Warwick Every-Burns. This left the business in a more fragile state as shares dropped almost A$2 to just above A$4. Steamrollers crushed millions of bottles of cheap wine to dispose of excess stock in the United States.[8] This eventually led to a class-action by disgruntled shareholders which was settled in 2017.[9][10]

Treasury has since worked with Accolade Wines to promote bottling efficiency, strengthening its performance in Asia, Australia, New Zealand and Europe.[citation needed]

Appointment of Michael Clarke as CEO

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In 2014, the board of directors appointed Michael Clarke, a former food executive with Kraft Foods and Premier Foods, as CEO.[8]

In 2015, Treasury reportedly began reducing its presence in the British market to concentrate on Asia, where margins were much higher.[11] However, later that year Treasury bought the majority of the wine business of London-based multinational Diageo.[8]

In July 2016, Treasury Wine Estates slimmed down its wine portfolio, announcing the sale of 12 cheap wine brands in the United States. The sale of the US brands represented around one million cases of wine.[12]

By 2017, Treasury had begun stockpiling luxury wines and rationing their release in China and the United States. More money was spent marketing the most profitable brands.[8]

In January 2019, Treasury's share price fell dramatically on a slew of news reports and was targeted by short sellers in the markets who accused the company of engaging in illegal practices including "channel stuffing" in attempts to inflate its profits.[13]

Appointment of Tim Ford as CEO

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In July 2020, Michael Clarke stood down as CEO and was replaced by the long-term executive, Tim Ford.[14]

In November 2021, Treasury acquired Napa Valley luxury winemaker Frank Family Vineyards for A$434 million.[15]

In October 2023, the Treasury announced it would acquire US rival Daou Vineyards for at least A$1.4 billion.[16]

Operations

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The business is divided into four regions: (1) Australia and New Zealand, (2) the Americas (i.e. United States and Canada only), (3) Europe (including Latin America), and (4) Asia (including the Middle East and Africa). Globally the company says it has access to more than 13,000 hectares of owned or leased vineyards, with more than 3400 employees, and 36 million cases of wine sold in the 2017 financial year.[17]

In 2013, Treasury Wine had to destroy six million bottle of wines in U.S. due to massive oversupply.[18][19] The company suffered from a series costly write-downs since its split-off from Fosters.[19] The company was accused of "channel stuffing"- inflating sales by pushing more to wholesalers than they wish.[18][20]

Treasury Wine tried to capitalize on strong demand of Penfold in China by bundling it with Wolf Blass and Rawson's Retreat.[20][21] China accounts for half of Treasury's sales in Asia and 80 per cent of its growth in the region, according to a report in 2018.[21] There was a massive supply glut with some distributors in China were said to be sitting on up to three years' worth of stock and deep discounting among wholesalers and retailers.[21] Despite higher taxes and cost of transportation, Rawson's Retreat was selling for less in China than in Australia, some distributors were even giving it away for free when bundled with premium wine.[21]

Brands

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Winery Appellation/Region Country External link Notes [22]
19 Crimes South Eastern Australia Australia [1]
Acacia Winery Los Carneros United States [2]
Annie's Lane Clare Valley Australia [3] Previously named Quelltaler[23]
Beaulieu Vineyard Rutherford United States [4]
Belcreme De Lys Central Coast United States
Beringer Vineyards Napa Valley United States [5] The oldest continuously operating winery in the Napa Valley, founded 1876.
The winery is on the National Register of Historic Places as a Historic District.[24]
Blossom Hill Central Coast United States [6]
Castello di Gabbiano Tuscany Italy [7]
Chateau St. Jean Sonoma Valley United States [8]
Coldstream Hills Yarra Valley Australia [9]
Devil's Lair Margaret River Australia [10]
Etude Los Carneros United States [11]
Fifth Leg Margaret River Australia [12] A label of the Devil's Lair winery.
Greg Norman Estates (various) (various) [13]
Heemskerk Tasmania Australia [14] Other labels: Abel's Tempest, Georg Jensen [25]
Hewitt Vineyard Rutherford United States [15]
Ingoldby McLaren Vale Australia [16]
Jamieson's Run Limestone Coast Australia [17]
Killawarra "South Eastern Australia" Australia [18] Created by Seaview in 1971.[citation needed]
Leo Buring Clare Valley &
Eden Valley		 Australia [19]
Lindeman's Hunter Valley &
Coonawarra		 Australia [20]
Matua Valley Wines Marlborough New Zealand [21] Other labels: Angel Cove[26]
Meridian Central Coast United States [22]
Penfolds Adelaide Hills &
Barossa Valley		 Australia [23]
Pepperjack Barossa Valley Australia [24]
Provenance Vineyards Rutherford United States [25]
Rawson's Retreat "South Eastern Australia" Australia [26]
Rosemount Estate McLaren Vale Australia [27]
Run Riot Central Coast United States [28]
Saltram Barossa Valley Australia [29]
Secret Stone Marlborough New Zealand [30]
Seppelt Victoria Australia [31]
Shingle Peak Marlborough New Zealand [32]
Sledgehammer Northern California & Mendoza United States & Argentina [33]
Squealing Pig Marlborough New Zealand [34]
St Hubert's Yarra Valley Australia [35]
Stags' Leap Winery Napa Valley United States [36]
Stellina di Notte Veneto Italy [37]
Sterling Vineyards Napa Valley United States [38]
T'Gallant Mornington Peninsula Australia [39]
Wolf Blass South Australia Australia [40]
Wynns Coonawarra Coonawarra Australia [41]
Yellowglen "South Eastern Australia" Australia [42]

References

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  1. ^ "Demerger Scheme Effective". www.fostersgroup.com. Archived from the original on 12 May 2011.
  2. ^ T. Stevenson The Sotheby's Wine Encyclopedia Fourth Edition p. 468 Dorling Kindersly 2005 ISBN 0-7566-1324-8.
  3. ^ Takeovers rarely work for shareholders, Michael West (10 June 2008) smh.com.au.
  4. ^ "Foster's shareholders decide wine and beer don't mix". ABC News. 29 April 2011. Retrieved 29 April 2011.
  5. ^ "Australia's largest wine companies by total wine production". winetitles.com. winetitles media. 2023. Retrieved 23 June 2024.
  6. ^ "Australia's largest wine companies by total revenue". winetitles.com. winetitles media. 2023. Retrieved 23 June 2024.
  7. ^ "Foster's Group Implements Treasury Wine Estates Demerger". Just Drinks. 23 May 2011. Retrieved 11 March 2016.
  8. ^ a b c d Evans, Simon (26 February 2011). "History lessons for Treasury Wine Estate's California dream". The Australian Financial Review. Fairfax Media. Retrieved 11 April 2021.
  9. ^ Gray, Darren (28 August 2017). "Treasury Wine Estates settles shareholder class action for $49 million". The Sydney Morning Herald. Fairfax Media. Retrieved 9 December 2017.
  10. ^ Sambrook, Jeremy (10 November 2017). "Court Approval of Conditional Settlement Treasury Wine Estates Limited" (PDF). Australian Securities Exchange. IMF Bentham. Retrieved 9 December 2017.
  11. ^ Evans, Simon (28 September 2015). "Paul Schaafsma the new boss in Accolade Wines reshuffle". The Sydney Morning Herald. Fairfax Media. Retrieved 8 December 2016.
  12. ^ "Treasury Wine Estates dumps cheaper US brands". ABC Rural. 3 July 2016. Retrieved 2 November 2016.
  13. ^ Gray, Darren (1 February 2020). "Treasury Wine Estates shareholders back company's US presence". The Sydney Morning Herald. Fairfax Media. Retrieved 23 February 2020.
  14. ^ Gray, Darren (12 February 2020). "Treasury Wine boss Clarke to retire in July". The Sydney Morning Herald. Retrieved 16 February 2024.
  15. ^ Evans, Simon (17 November 2021). "Treasury Wines buys Californian winery in $434m deal". Australian Financial Review. Retrieved 16 February 2024.
  16. ^ Koehn, Emma (30 October 2023). "Penfolds maker buys Californian luxury winemaker for $1.6 billion". The Sydney Morning Herald. Retrieved 16 February 2024.
  17. ^ "About". Treasury Wine Estates. Retrieved 9 December 2017.
  18. ^ a b Butler, Ben (18 August 2020). "There could be more to this wine war than just another trade stoush with China". The Guardian. Retrieved 4 November 2020.
  19. ^ a b "Treasury Wines considers acquisitions, despite $101m loss". www.abc.net.au. 21 August 2014. Retrieved 4 November 2020.
  20. ^ a b Danckert, Sarah (6 September 2019). "Departures and detractors: ASX darling Treasury Wines is under fire". The Sydney Morning Herald. Retrieved 4 November 2020.
  21. ^ a b c d "Treasury Wine Estates facing China glut". Australian Financial Review. 16 May 2018. Retrieved 4 November 2020.
  22. ^ "Our brands". Treasury Wine Estates. Retrieved 6 December 2016.
  23. ^ "Home - Annie's Lane". www.annieslane.com.au.
  24. ^ "Beringer Vineyards | A Napa Valley Icon". www.beringer.com.
  25. ^ "Home - heemskerk". www.heemskerk.com.au.
  26. ^ "Matua Wines | Get Ready To Chill - Matua". www.matua.co.nz.
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