Management of the Penfolds wine brand is set for an overhaul as its owner rolls out details of a $260 million restructure.
Treasury Wine Estates Ltd announced today that it is making substantial changes to its business model by changing the release date of its flagship Penfolds wines to better manage allocations and availability.
“As part of TWE’s premiumisation strategy and plans to further improve the company’s business model, the company will move the release dates for new vintages of its Penfolds Bin Series and Penfolds Icon & Luxury Collection wines to one combined annual release, commencing 16 October 2014,” TWE’s statement to the stock exchange said today.
“Today’s announcement complements the recent decision to significantly increase investment in consumer marketing and will help ensure that each additional dollar invested has maximum consumer impact.
“Moving the release of Penfolds Bin Series and Icon & Luxury Collection wines to October each year will ensure Penfolds wines are available for sale over a much longer trading period and help TWE establish a more sustainable business model.
“An October release also means the company is better placed to manage allocations and inventory levels with key customers around the world throughout the year – in contrast to selling through the release in the final quarter of each fiscal year.”
Penfold’s range has been traditionally released in May.
The move means the 2010 Grange will be released in a few months’ time.
TWE chief exective Michael Clarke also announced a $260 million impairment will be booked into the company’s accounts.
“TWE has now completed a detailed review of its long-term plans and will now recognise a non-cash brand and related-asset impairment of up to $260 million,” he said.
“The impairment reflects the combination of historical prices paid for pre-demerger acquisitions and the decline in market growth rates for commercial wine globally, and relates to the company’s commercial brands, IT, plant and equipment assets.
“Today’s announcement of an asset impairment further highlights the need for TWE to do things differently.
“The current business model is not being optimised and fails to reflect the company’s outstanding capability, brands and people.
“The changes we are making to our business model, including moving Penfolds release dates, not only make commercial sense but are also good for our brands.”
He said the October release for Penfolds wines was “fully supported” by the company’s winemakers.
“This change places the consumer at the heart of our business model with Penfolds wines now more readily available in the lead-up to key festive periods including Thanksgiving, Christmas, Chinese New Year and Easter”.
Penfolds’ chief winemaker Peter Gago said the time shift would improve quality.
“Releasing Penfolds wines in October, rather than in March and May as we have in the past,means these wines will now be shipped from the winery in cooler conditions, ensuring ideal quality when they arrive in market,” he said.
“Our current release dates also mean Penfolds winemakers are often busy making wine for the present year’s vintage and are severely constrained in their ability to support sales and marketing efforts.
“An October release frees them up to provide the support our Bin Series and Icon & Luxury wines deserve.”
Penfolds Bin Series and Icon & Luxury Collection October release wines:
2012 Bin 707 Cabernet Sauvignon
2012 RWT Barossa Valley Shiraz
2012 Magill Estate Shiraz
2011 St Henri Shiraz
2012 Bin 169 Coonawarra Cabernet Sauvignon
2013 Reserve Bin A Adelaide Hills Chardonnay
2012 Bin 389 Cabernet Sauvignon
2012 Bin 407 Cabernet Sauvignon
2012 Bin 28 Kalimna Shiraz
2012 Bin 150 Marananga Shiraz
2014 Bin 51 Eden Valley Riesling
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