Lead

Australia's wine industry is undergoing significant restructuring, with major players re-evaluating their portfolios amid an oversupply of wine and shifting market conditions. Two of the country's largest wine-related companies have announced strategic changes that could reshape the industry: Endeavour Group, owner of Dan Murphy's and BWS, is stepping away from some key vineyards and wineries, while Treasury Wine Estates (TWE) is considering dropping more than half of its labels to focus on premium wines.

Coverage comparison

ABC Australia reports on both developments, highlighting the industry-wide pressure. On the one hand, Endeavour Group is stepping away from production in South Australia, Victoria and Tasmania, closing a major bottling plant. On the other, TWE is focusing on premium wine, with the future of its remaining 66 labels, including the iconic Wolf Blass, unclear. Both moves reflect a broader trend of winemakers pulling back from production and divesting assets due to global difficulties in the wine market.

Key claims

  • Endeavour Group, which owns Dan Murphy's and BWS, is stepping away from some key vineyards and wineries in South Australia, Victoria and Tasmania and will close the VinPac facility at McLaren Vale at the end of the year. Its Angaston site in the Barossa will stay open.
  • Endeavour will retain key South Australian brands, including Chapel Hill from McLaren Vale, Riddoch Coonawarra and Krondorf Barossa, but will sell off associated vineyards and facilities and instead source grapes from the market.
  • The move is not expected to have an impact on prices for consumers.
  • The Australian wine industry is facing an oversupply situation, not just in commercial product but also in some premium regions, according to industry sources.
  • Treasury Wine Estates is making a move to dump more than half of its labels as part of a focus on premium wine. The company has outlined a strategy by highlighting 10 brands that will lead a restructure and become the focus of its investment. The future of the remaining 66 labels in TWE's portfolio, including Wolf Blass, is unclear.
  • TWE says it's been working towards its 'premiumisation strategy' for a long time.

Industry context

Australian Grape and Wine chief executive Lee McLean commented on Endeavour's move, saying it was not a surprise given the state of the industry. "Certainly, it's reflective of the conditions that the industry is facing at the moment more broadly," he said. "Businesses, whether they are very large businesses or small businesses, are making very difficult choices at the moment about their future."

Mr McLean also noted that while much of the focus had been on the problems of inland wine-grape producing regions, such as the Riverland, Riverina and Murray Valley, the tough times were spreading to other regions. "What we are now seeing is that some of that pain has started to spread..." he said, indicating that premium regions are also feeling the pinch.

TWE's chief supply and sustainability officer Kerrin Petty explained the company's approach: "We've probably moved some of those brands more into the sort of tactical-type space as opposed to the power brands." TWE has been working on reducing its brand offerings down to 30, though no timeline has been given. "[We're] still working through the exclusions to the list," Mr Petty said. "When you have investment spread across a lot of those brands, it's very hard to get the right emphasis on any one of those." He added that putting more investment behind key brands rather than spreading it across 76-odd brands would improve the performance of Treasury Wine Estates.

The restructure follows a trend of winemakers pulling back from production and divesting assets due to global difficulties in the wine market. The impact on local growers and the industry remains to be seen as these changes unfold.