In an effort to further reduce overhead costs, Treasury Wine Estates (TWE) announced that it is making substantial changes to its supply chain network in both the USA and Australia.

As suggested at TWE’s interim 2015 result announcement, the company is executing plans to extract supply chain optimisation savings and accelerate its focus on the Luxury & Masstige versus Commercial portfolios globally, thereby making significant changes to its supply chain network and cost base in both countries.

In the USA, TWE will consolidate its production facilities so that TWE’s Asti winery in Sonoma County, California, will become surplus to the company’s production needs.

To increase utilisation, Asti’s wine production will be transferred to other wineries within TWE’s portfolio, with the majority of Commercial and Masstige wine production transferred to Paso Robles and Luxury wine transferred to Beringer.

Packaging lines at TWE’s Napa Bottling Centre are being consolidated to further optimise production efficiency and the packaging and warehousing of wines previously processed at Karadoc near Mildura Victoria will now occur at TWE’s Wolf Blass facility in the Barossa, South Australia.

Furthermore, Commercial wine currently processed at TWE’s Great Western and Wynn’s Coonawarra facilities will be transferred to the Karadoc site, with Karadoc to become exclusively focused on the production of TWE’s Australian Commercial wine portfolio.

At the same time, the processing of Masstige wine at Great Western and Wynns Coonawarra will be transferred to Wolf Blass. TWE says this will in turn result in increased Luxury wine processing and warehousing capacity at these sites.

As part of TWE’s strategy to focus on fewer brands, TWE will also commence a sale process for excess assets in Australia including the Ryecroft winery, T’Gallant and Bailey’s properties.