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1/04/2015

TWE announce major changes

Treasury Wine Estates (TWE) has announced plans to cut an unspecified number of jobs and put some of its Australian and US wineries up for sale in a series of cost cutting changes.

The move comes as part of a previously stated attempt to focus on a smaller number of brands and deliver $35 million in cost savings in fiscal 2015.

Treasury’s packaging and warehousing facility at Karadoc near Mildura will be shut, while its Australian wineries Ryecroft, T'Gallant and Bailey's will be put up for sale, along with California’s Asti winery.

Workloads from the huge Karadoc facility will be transferred to Wolf Blass winery in the Barossa by 2016, according to the company’s statement.

Expecting some job loss, the company said “the supply chain will be more efficient and it will include a small reduction in headcount, but it’s not a big one.”

Treasury said the changes would generate savings of $50 million a year by 2020, with the benefits starting as early as next year.

Michael Clarke, TWE’s chief executive officer, said the changes are a tangible example of how TWE is executing a separate focus on its luxury and masstige versus commercial portfolios globally.

“These are crucial steps designed to better optimise our supply chain network and extract significant cost savings over time.

“I am very pleased that we, at TWE, are now embedding a cost conscious culture. Not only are the cost reductions funding the 50 percent uplift in consumer marketing in fiscal 2015, the savings are also supporting actions to improve the quality of TWE’s base earnings, while delivering profit growth for shareholders.”

Clarke announced a strategic transformation last year, which involved boosting investment in marketing, cutting costs and running its luxury brands division separate to its commercial brands.

“The changes announced today are significant ones for our business and demonstrate our commitment to delivering on the company’s strategic road map,” Clarke said.

“By continuing to reduce costs, and optimising the scale and efficiency of our supply chain networks in major production areas, Treasury is well placed to pursue growth opportunities­ that exist for our wine brands in key markets around the world.”


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