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Treasury changes Penfolds release dates as it writes down AU$260m

Published:  25 June, 2014

Treasury Wine Estates says 2015 will be a "reset year" as it writes down AU$260 million for 2014 and prepares to consolidate Penfolds' release dates to October to better manage allocations.

Treasury Wine Estates says 2015 will be a "reset year" as it writes down AU$260 million for 2014 attributed to prices paid for pre-demerger acquisitions and the decline of entry-level wine globally.

Chief executive Michael Clarke, who came on board in March, said the impairment "further highlights the need for TWE to do things differently". "The current business model is not being optimised and fails to reflect the company's outstanding capability, brands and people," he added.

Michael ClarkeTreasury Wine EstatesTreasury Wine Estates' new chief executive Michael Clarke said 2015 will be a 'reset year'.

The group, which owns brands including Penfolds Grange, Rosemount and Wolf Blass, announced a four-step plan to resuscitate Treasury's fortunes back in April. It now says it has completed its fiscal 2014 plans, boosted consumer marketing and cut overheads for the fiscal year 2015 and is now looking to "address structural opportunities for long-term sustainable growth".

Part of this move sees the firm change the release dates for its flagship Penfolds brand to "better manage allocations and availability". Penfolds Bin Series and Penfolds Icon & Luxury Collection wines will now be released together on October 16, 2014, and on the third Thursday of October from now on. Treasury insists that the date change means Penfolds wines will be "available for sale over a much longer trading period and help TWE establish a more sustainable business model". It states that this will help manage stock and allocations better rather than selling the release through in final quarter of each fiscal year.

Penfolds' chief winemaker, Peter Gago, said: "Releasing Penfolds wines in October, rather than in March and May as we have in the past, means these wines will now be shipped from the winery in cooler conditions, ensuring ideal quality when they arrive in market."

Treasury Wine Estates has suffered in recent years and recently attracted a AU$3 billion takeover approach from US private equity giant KKR, which was dismissed by the board.

Earlier this year, Treasury Wine Estates UK head Dan Townsend told it was focusing on its core brands, and "quite publicly stepped away from entry-level volume that simply did not make sense". Townsend was particularly bullish about the opportunities for its fine-wine operation in the UK, which has been growing strongly in the past two years.