By Jessica Yun
Treasury Wine Estates has resigned itself to being the owner of lower-priced wine brands Wolf Blass, Lindemans, Yellowglen and Blossom Hill, after failing to find a buyer at an acceptable price as drinkers continue to turn their noses up at cheap plonk.
The wine giant announced in August that it was planning to sell the commercial wine brands, but lowball offers from potential buyers have forced it to reconsider.
Treasury Wine Estates CEO Tim Ford has ruled out the possibility of axing the brands. “Maintaining commercial brands strategically is not our plan,” he said. “However, we couldn’t get a financial outcome to sell those brands, so we’re responsible to make the decision to maintain them.”
Drinkers are shunning cheap wine – and so are potential buyers of the brands.Credit: Sean McDonald
“They’re not going to be part of our growth [but] you may as well keep selling these brands.”
The $8.5 billion ASX-listed Penfolds put the wine brands on the market in August after a six-month review along with a $354 million write-down of the brands’ value, or $290 million after tax.
Interest in cheap wine is declining as consumers gravitate towards better-quality, more expensive wine in a global trend of “drinking less, but better”. Ford’s comments came after he unveiled a 32.5 per cent lift in statutory net profits to $220.9 million for the first half of the 2025 financial year, driven by the removal of China’s punitive tariffs on Australian wine.
‘They’re not going to be part of our growth [but] you may as well keep selling these brands.’
TWE chief Tim Ford
Flagship luxury wine brand Penfolds is now responsible for more than half (55.8 per cent) of total sales, with its earnings growing 33.9 per cent during the six-month period. The Treasury Americas portfolio (including Matua, Beringer, Frank Family Vineyards, and Stags’ Leap) also delivered a strong result of 66.9 per cent earnings growth, while its Premium Brands (including the commercial brands and wines such as Squealing Pig, 19 Crimes, Pepperjack) saw earnings halve to $22.9 million, reflecting consumers’ softer demand for cheaper wines.
Treasury Wine is leaning heavily on its luxury portfolio as the primary driver of growth, acquiring Californian vineyard Daou in October 2023. “It’s the earnings centre of gravity, it’s the heart of this business now,” Ford said.
“The premium brands play a supporting role across the business, but our future growth, our future potential, our future unlock, is absolutely biased towards our luxury portfolio now.”
Poor performance in the premium brands division led Treasury Wine to lower its earnings forecast for the year to $780 million, which falls at the lower end of the range of $780 million to $810 million it had provided previously.
The company’s share price closed 5.7 per cent lower, with UBS analyst Shaun Cousins describing the profit warning as “disappointing but somewhat reflected in [the] share price”.
MLC Asset Management portfolio manager Anthony Golowenko described Penfolds as the “global jewel in the crown” for the company, with demand for luxury wine reflecting an uneven impact of cost-of-living pressures.
“Consistent execution, China distribution channels ‘back in business’, and within the American division, encouraging signs from the Daou acquisition [are] driving top-line growth and margin expansion where incrementally higher synergies are now expected to be delivered,” he said.
Treasury Wine announced an interim dividend of 20¢ per share, 70 per cent franked, representing a 17.6 per cent lift from the same period last year.
The company has had to increase prices in recent years, but Ford ruled out any price rises for Australians in 2025.
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