Penfolds maker Treasury Wine Estates slashes value of its US business by $687m
Treasury Wine Estates has slashed $687m from its struggling US business value as new boss Sam Fischer inherits decades of American market failures.
Treasury Wine Estates, the maker of Penfolds, has slashed the value of its American business by $687m, marking another painful misstep in its 25 years in the world’s largest wine market.
Chief executive Sam Fischer, who joined the company only a few weeks ago, will now be forced to detail his plan to rescue the US arm at an investor and analyst conference this month and at a time when Treasury Wine shares have fallen by almost 50 per cent in the last 12 months.
Pressure will likely grow from investors and analysts to take decisive action on the spluttering US vineyards and wine brands business, which might include a sell down of some assets. It comes at a time when wine consumption is diving in America, as well as the rest of the world, so finding a buyer at a suitable price could prove difficult.
The problems plaguing the US wine business have been building up for decades. Under its old corporate name of Foster’s Brewing Group, Treasury Wine spent almost $3bn buying its first Californian vineyards in 2000, but the investment never paid off, much to consternation of analysts and investors.
Treasury Wine followed that with a further $2bn of deals (DAOU and Frank Family Vineyards) in the US in the last few years, but now as wine consumption slides, that push into America is proving costly.
Although those last two US business were bought by his predecessor Tim Ford, they will tarnish Mr Fischer’s maiden results presentation early in 2026 and that will also plunge Treasury Wine deep into a reported loss for the year.
Mr Fischer, who has come to the global winemaker from being the boss of Lion, now has the challenge of turning around his sizeable US wine assets as well as facing sliding demand in his key China market and in Australia.
In October, shortly before Mr Fischer joined the company, Treasury Wine cancelled its earnings guidance due to its troubled performance and a difficult market, and halted its $200m share buyback, which sent its shares crashing to a decade-low.
The latest impairment to its 2026 interim results of $687.4m follows a $290m impairment that hit the winemaker’s accounts in August 2024 which related to its commercial brands portfolio that includes 19 Crimes, Pepperjack, Seppelt and Squealing Pig. They were suffering from a protracted sales downturn. Such is the crisis within the cheaper, commercial end of the wine market that Treasury Wine recently attempted to sell part of its commercial portfolio but failed to find a buyer at a suitable price.
But now the US arm of Treasury Wine – which features a strong line of premium wines and which the company had invested heavily in with the $US1bn acquisition of California’s DAOU Vineyards in 2023 and Napa Valley’s Frank Family Vineyards for $US315m in 2021 – is the source of the latest balance sheet pain.
In an ASX release on Monday, Treasury Wine disclosed that a reduction in future cash flow in the Americas business of 11 per cent per annum over the forecast period would reduce impairment headroom to nil.
Treasury Wine said that while some brands were growing, the broader portfolio had been squeezed by falling wine consumption in the US.
This is a trend that was being experienced by many other markets.
Treasury Wine was also hurt this year by the sudden exit of a key wine distributor in California.
“While a number of Treasury Wine’s larger brands continue to grow ahead of market – including DAOU, Frank Family Vineyards and Matua – in response to further moderation in US wine category trends, Treasury Wine has applied more conservative long-term market growth assumptions, resulting in reduced long-term earnings growth rates, which will impact carrying values within the Treasury Americas and Treasury Collective – Americas cash generating units,” the winemaker said.
It said the final impairment amount and allocation to assets would be concluded as part of the 2026 interim results, however it is expected that the impairment will result in at least all goodwill $687.4m at June 30, 2025 currently carried in the Americas being written off, with potential to impact other assets. Shares in Treasury fell 0.7 per cent on the impairment news to $5.78, and are down from a peak of almost $15 in early 2023.
“While non-cash in nature, and we believe headwinds to US wine market fundamentals are well understood, the announcement is negative in that it reflects increased pessimism by Treasury Wine regarding long-term market fundamentals, and reinforces the view that Treasury Wine materially overpaid for previously acquired Americas brands,” said RBC Capital Markets analyst Michael Toner.
Originally published as Penfolds maker Treasury Wine Estates slashes value of its US business by $687m
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