This morning, Treasury Wine Estates has announced to the ASX that it intends to divest its Commercial Brand portfolio by recognising a non-cash impairment charge of $290 million after tax in its F24 full year results. Defined by its sub $10 price point, the Commercial Brands in this portfolio include Wolf Blass, Yellowglen, Lindeman’s, and Blossom Hill.
Collectively, these four brands represented less than 5% of TWE’s net profits in the recently finished financial year 2024.
“Following the latest review of the carrying value of the Group’s assets as part of its annual impairment testing process, TWE will recognise a non-cash impairment charge of $354m ($290m post-tax) in its financial result for the year ended 30 June 2024 in relation to the TPB division,” read this morning’s ASX post.
The news follows on from indications earlier in the year that it could remove all cheaper wines from its portfolio. It also follows on from TWE’s recent restructuring that intends to strengthen its Premium Brands Division of wines priced between $10 and $30. This restructuring saw TWE integrate its Global Revenue Groht function into its Treasury Premium Brands Division in a move that hopes to unlock growth opportunities for TWE’s priority premium brands.
According to this morning’s announcement, the divestment of its Commercial portfolio hopes to assist in developing this goal, contributing to Treasury Premium Brand’s strategic focus of premiumisation, given “it has delivered a three-year NSR CAGR of 10% for its priority Premium brands, which include Wynn’s, Pepperjack, Squealing Pig and 19 Crimes.”
While its full Financial Year results are scheduled to be released next Thursday 15 August, TWE announced this morning that its “unaudited EBITS before material items for F24 are expected to be $658.1m, an increase of 12.8% on the pcp.”
TWE has also announced that it will be increasing the price of Penfolds globally: “by leveraging our unique Penfolds brand status to drive ongoing demand, we remain steadfast on our clear ambition to be the number one luxury wine brand in the market,” said Penfolds CEO Tim Ford.
More information about the portfolio divestment and the $290 million non-cash impairment charge will be published to Drinks Trade soon.
