Major changes to TWE’s supply chain

Treasury Wine Estates has revealed that its US and Australian supply chains will be undergoing a series of radical changes.

The company said in a statement: “As foreshadowed at TWE’s interim 2015 result announcement, the Company is now executing plans to extract supply chain optimisation savings and accelerate its separate focus on the Luxury & Masstige versus Commercial portfolios globally, by making significant changes to its supply chain network and cost base in both the USA and Australia.”

In the US, TWE has said it will be consolidating its production facilities and that its Asti Winery in Sonoma will become “surplus to the company’s production needs”.

Production will be transferred to other wineries, with the majority of commercial and “masstige” wine production going to Paso Robles and luxury wines to Beringer.

Packaging lines at TWE’s Napa Bottling Centre will also be consolidated.

In Australia, the current packaging and warehousing of wines in Karadoc in Victoria will cease and its operations completely moved to the new “state-of-the-art” Wolf Blass warehouse by 2016.

Karadoc will instead begin to focus on the company’s commercial wine production which will be transferred from Great Western and Wynn’s Coonawarra sites.

Simultaneously, Wolf Blass’ new winery will takeover production of “masstige” wines currently handled by Great Western and Wynn’s, allowing those two wineries a greater capacity to produce and warehouse luxury wines.

TWE has also announced it will be selling “excess assets” including the Ryecroft winery and its T’Gallant and Bailey’s sites.

Michael Clarke, TWE’s CEO, said: “These changes are a tangible example of how TWE is executing its separate focus on its luxury and masstige versus commercial portfolios globally, and are crucial steps designed to better optimise our supply chain network and extract significant cost savings over time.”

He continued: “I am very pleased that we, at TWE, are now embedding a cost conscious culture. Not only are the cost reductions funding the 50 percent uplift in consumer marketing in fiscal 2015, the savings are also supporting actions to improve the quality of TWE’s base earnings, while delivering profit growth for shareholders.”

“The changes announced today are significant ones for our business and demonstrate our commitment to delivering on the Company’s strategic roadmap. By continuing to reduce costs, and optimising the scale and efficiency of our supply chain networks in

major production areas, TWE is well placed to pursue growth opportunities that exist for our wine brands in key markets around the world.”