Treasury Wine Estates – Australia’s biggest winemaker by revenue and production – will close its Karadoc winery in Mildura next year, citing rising production costs and a customer shift away from cheaper “commercial” labels.

TWE said drinkers were moving to more premium brands, with the company also pivoting to concentrate on that and the luxury market.

“Making the decision to close a site is something we take very seriously and is a last resort after we’ve looked at all other possible options,” TWE chief supply officer Kerrin Petty said.

“Globally, the wine industry is seeing consumers shift away from commercial wine (less than $A10 a bottle).”

Karadoc opened in 1973 and makes wines for brands including Wolf Blass, Lindemans, Yellowglen and 19 Crimes.

TWE said production for those brands would continue to be made, in the Barossa and with winemaking partners Zilzie Wines and Qualia.

Karadoc can process 110,000 tonnes but only 60,000 tonnes went through last harvest

“Over the coming years, we expect commercial volumes at Karadoc to continue to decline and volumes to be at around 60 per cent of the capacity that the site is built to process,” Petty said.

TWE said it planned to sell the Karadoc site and also offload vineyards at Lake Cullulleraine in northwest Victoria and Yankabilly in southwest NSW.

“We continually review our global vineyard assets to ensure they’re in the best possible places to grow our premium and luxury portfolio,” Petty said.

-with AAP