TWE confirms closures in production shakeup

Treasury Wine Estates (TWE) is to close its Great Western winery in Victoria and Matua winery in Auckland as part of its continued push to remove “cost and complexity” from its global operations.

Production at Treasury’s Matua Auckland winery will be moved to its Marlborough facility, which has undergone a multi-million revamp in the past two years.

The Great Western Winery was founded in 1865 and is best-known for producing TWE’s Seppelt sparkling wine brand. Production will eventually be moved to another winery while Treasury considers its options for the facility, including its sale, with grapes for the production of Seppelt still be taken from the Great Western region.

In a statement released on Tuesday Bob Spooner, chief supply officer at TWE, said: “In Australia, the size and location of the Great Western winery means it is both under- utilised and increasingly non-viable as a production facility, so we are ceasing operations and moving production into other wineries in TWE’s Australian wine production network in order to reduce costs and remove unnecessary complexity.”

TWE also announced it will be closing its Matua Auckland winery, packaging and cellar door site, consolidating the company’s New Zealand production into its Matua Marlborough winery, which has undergone a multi-million dollar expansion over the past two years.

“It is a state of the art facility capable of handling the vast majority of TWE’s New Zealand wine making requirements, so it makes sense to simplify and consolidate our production into one operation”, added Spooner.

The closures are part of Treasury’s ongoing plans to optimise its supply chain and slash costs by AUS$30m by removing complexity from its operations around the globe.

“These supply chain changes will not impact any of TWE’s brands or existing supply contract arrangements with grape growers, and the company remains committed to supporting and investing behind key brands such as Seppelt and Matua”, Treasury stressed in its statement.

Two days before announcing the closure of both sites, Treasury announced it had secured a $2m grant from the Regional Development Fund from the South Australian Government as part of the Company’s $25 million expansion of its Wolf Blass Winery & Packaging Centre, located in the Barossa Valley.

TWE announced plans to expand its Wolf Blass packaging centre in March, in line with its plans to shift its focus toward the premium end of its portfolio by removing non-priority brands. The company has already sold its Asti Winery, its Souverain brand and inventory, and vineyard assets in California’s Sonoma County to E & J Gallo Winery.

“The Wolf Blass Packaging Centre was purpose-built and cost over $100million when it was commissioned in October 2005, and this $2million grant is the best tenth birthday gift we could wish for”, said Peter Taylor, TWE’s director of wine production for Australia & New Zealand. “It sets the Centre up for the next decade”.

Its expansion will include enlarging the bottling hall building, installing an additional bottling line, new storage for racked finished goods, creating an area for additional dry goods storage and a waste and recycling area.

The changes follow a This followed  prompting plans to restructure its business by newly appointed CEO Michael Clarke.

Announcing its 2015 full year results in August, the company posted a net profit of AU$77.6 million after tax, up $178.5m on its 2014 end of years results, which saw it suffer a crushing loss of $100 million.

TWE’S other brands include Penfold’s, Wynns and Lindeman’s.