March 10th – Treasury Wine Estates Limited (ASX:TWE) today announced further progress on plans to deliver the future state premium US wine business, with an agreement reached with The Wine Group in relation to several of TWE’s commercial tier brands from its US portfolio.
Under the terms of the long-term licensing agreement1, which is effective 9 March 2021 (US Pacific time), The Wine Group will source and sell the Beringer Main & Vine, Beringer Founders’ Estate, Coastal Estates and Meridian brands2in the Americas.
The Wine Group will acquire existing inventories associated with these brands on a progressive drawdown basis and will assume responsibility for related future bulk wine supply contracts.
On today’s announcement, TWE’s Chief Executive Officer Tim Ford said:
“We are delighted to be entering into this long-term transaction with The Wine Group, which will be of mutual long-term benefit to our respective organisations. For TWE, this transaction is a significant milestone towards our plans to deliver the future state premium US wine business and we can now focus solely on continuing the growth of our premium brand portfolio to drive future performance in the Americas”.
“The Wine Group is a leader in the industry with strong wine brands that deliver unbeatable value” said Cate Hardy, CEO of The Wine Group. “The acquisition of these popular brands further positions The Wine Group as a global leader in wine. Adding these brands complements TWG’s leadership in the value segment along side our growing portfolio of premium wines, introducing more consumers to our high quality wines at every price point.”
As outlined at the 1H21 results announcement, TWE is implementing plans intended to deliver a premium focused business in the Americas with broadly half the volume, similar earnings 3 over time and progress towards the target regional EBITS margin of 25%. TWE expects to generate one-off net cash inflow of at least A$300m4 as part of these plans. Today’s announcement, which will generate cash proceeds of approximately A$100m, is a meaningful step towards these goals. One off-costs associated with this transaction were recognised as material items in the 1H21 results.
For the purposes of ASX Listing Rule 15.5, TWE confirms that this document has been authorised for release to the market by the Chairman of the Board.