Treasury Wine Estates is Australia’s
largest listed global winemaking and distribution business. Treasury is based in Melbourne and was
formerly part of the Foster’s international brewing group until the companies
split in May 2011. Since the de-merger
Treasury has performed extremely well on the Australian Securities Exchange (‘ASX’)
providing investors with strong annual returns.
Treasury currently has a market capitalization of A$5.75 billion (US$4
billion).
Treasury manages over 11,000 hectares of
vineyards across 16 counties across, and has sales totaling over 35 million
cases of wine annually generating in excess of A$1.7 billion (US. $1.2 billion). Treasury’s key brands include Penfolds, Stags’ Leap, Etude,
Pepperjack, Wynns Coonawarra Estate, Wolf Blass, Beringer, Chateau St Jean,
Matua, Castello di Gabbiano, Lindeman’s, Rosemount and Yellowglen.
TWE also recently acquired Diageo's wine business (as of November 2015) for $600M. Their portfolio includes well recognized Sterling Vineyards, Beaulieu Vineyards, Acacia, Provenance, and Hewitt. CEO Mike Clarke said the acquisition was part of a two-tiered strategy; the high end California wineries represent a stark contrast from Blossom Hill (one of Diageo's lower-end commercial wine brands which they insisted be part of the deal). This acquisition pushes TWE from 83 brands to over 100.
ReplyDeleteFrom Diaego's perspective, they were looking to sell their wine business to focus on their much larger business in spirits. Reasons for this? (1) It is their core competency, and they claim a much larger market share in spirits. (2) My educated guess is that premium distilled spirits can often claim higher profit margins than wine.
As we continue to see consolidation in the industry, it is interesting to see how these companies decide to acquire (or sell off) different parts of their business, and how that fits in with their overall strategies.