Under Ford, Treasury spent billions of dollars expanding in America, purchasing high-end California producer Daou Vineyards for $1.6 billion in 2023 and luxury chardonnay maker Frank Family Vineyards for $434 million in 2021.
Fischer defended the company’s US expansion, saying the country was the largest luxury wine market in the world and the winemaker just needed to nail its execution, with the executive set to visit its operations there in the new year.
Treasury chief executive Sam Fischer says it is “critical” for the company to improve the perception of the upmarket Penfolds brand. Credit:
“If you’ve got a strong position that allows you to get a decent share with distributors, then there’s no reason why, through great execution, you can’t see consistent returns,” he said.
Notable changes could be on the cards, however, with Fischer also announcing a full re-assessment of Treasury’s portfolio and operating model in an internal review dubbed “TWE Ascent”, with the goal of cutting $100 million, per year, in costs over the next two to three years.
TWE Ascent will analyse the company’s position in key markets and its structure, with Fischer saying management hoped to see the first cost savings in the 2027 financial year.
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“We have commenced work to identify opportunities to simplify the way we operate, to strengthen our execution focus right across the business and to realise significant cost benefits,” he said.
These opportunities could see the company refocus some of its efforts on different wines, including lighter varietal and refreshment styles, Fischer said.
“I’m energised by the opportunity to accelerate a transformation agenda to reshape TWE for its next era, leveraging these strong foundations. I look forward to providing our investors with updates on our progress over coming months.”
Penfolds, which makes up 60 per cent of Treasury’s earnings, has seen weaker sales growth for its “ultra-luxury” division, with sales in China especially coming in below expectations. As a result, Treasury will reduce its inventory in the country by 400,000 cases, valued at $215 million.
Treasury has been looking for a new distributor in the US after a key player, Republic National Distributing Company, in June said it would stop operations in California from September. The company said negotiations were still ongoing.
It also cancelled a $200 million share buyback, which the company had previously paused with just $30.5 million already completed.
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