Treasury Wine Estates to sell Wolf Blass and Blossom Hill

Treasury Wine Estates (TWE) is to write down and sell off Wolf Blass and a clutch of other mainstream labels to focus on higher-margin brands. 

In a filing to the Australian Stock Exchange (AXS), TWE said it would look to divest the entirety of its “commercial” brand portfolio – comprising wines with a retail price below A$10 (£5.10) a bottle to focus on posher tipples such as Squealing Pig and 19 Crimes. 

The company has sought to premiumise its portfolio in recent years amid a glut of Australian wine, exacerbated by Chinese import tariffs in place until earlier this year, and declining wine consumption globally.

As a result, TWE’s commercial division now accounts for less than 5% of its total group profits. Brands in the division include Wolf Blass, Blossom Hill, Yellowglen and Lindeman’s.

TWE said it would book a cash impairment charge of A$290m (£148m) after tax related to its commercial wine portfolio when it announces its full-year results next week.

The move reflected “moderated top-line expectations as a result of challenging market conditions for commercial wine, across all markets, and the underperformance of… brands relative to the category”, TWE said.

It comes after TWE’s major Aussie wine rival Accolade Wines last month struck a deal to acquire the majority of Pernod Ricard’s wine portfolio.

Brands including Jacob’s Creek, Campo Viejo and Brancott Estate are set to join Hardys, Jam Shed, Echo Falls and Mud House in Accolade’s roster.

The deal is the first to be completed by Accolade since it was taken over by a Bain-led consortium earlier this year.

Accolade had previously been struggling to service its debts, faced by similar challenges to those outlined by TWE as reasons for wanting to divest its mainstream brands.

Both Blossom Hill and Wolf Blass featured in The Grocer’s Britain’s Biggest Alcohol Brands report 2024. Combined, their UK sales are worth in excess of £130m [NIQ 52 we 24 April 2024].

However, in the past year sales have dipped by 11.4% and 21.4% respectively.