By Andy Young

Treasury Wine Estates (TWE) has announced "significant changes" to its supply chain network as it separates where its luxury, masstige and commercial wines are produced.

The changes will see the packaging and warehousing of wines move from TWE's Karadoc facility near Mildura, Victoria to its "state-of-the-art" Wolf Blass facility in the Barossa, South Australia.

In addition to these changes TWE is also switching where some of its wine is produced.

Commercial wine which is currently processed at TWE's Great Western and Wynn's Coonawarra facilities, will be transferred to the Karadoc site, which will becoming exclusively focused on TWE's Australian commercial wine portfolio.

The masstige wines that are currently being produced at Great Western and Wynn's Coonawarra will now move to Wolf Blass, meaning those sites can increase their luxury wine processing and warehousing capacity.

A spokesperson for TWE told TheShout that the changes should not impact supply or the trade. 

"We are still producing the same wines, it's just that the calibration of where the wines are produced is going to change," TheShout was told.

"The primary purpose of the supply chain reconfiguration and efficiency drive, is to make sure that we have the right fruit going into the right facility in the most cost effective manner.

"It's creating greater specialism and focus for the wines that we produce, so certain facilities will have more of a focus on commercial or luxury wines for example.

"So regarding the wines themselves, some wines that were made at one facility will now be made at another. So, for the trade, they will still be getting the same wines and they will still be made with the same grapes, they will just be made at a different facility."

TWE is also planning to sell some of it assets, namely the Ryecroft winery, which TWE said last year it was closing, along with the T'Gallant and Bailey's properties in the Mornington Peninsula and Glenrowan respectively.

TWE said that it initially expects to deliver $35 million in cost savings in this financial year, with a further $15m expected to realised in fiscal 2016.

Michael Clarke, TWE's chief executive officer, said: "These changes are a tangible example of how TWE is executing its separate focus on its Luxury and Masstige versus Commercial portfolios globally, and are crucial steps designed to better optimise our supply chain network and extract significant cost savings over time.

"The changes announced are significant ones for our business and demonstrate our commitment to delivering on the company's strategic roadmap. By continuing to reduce costs, and optimising the scale and efficiency of our supply chain networks in major production areas, TWE is well placed to pursue growth opportunities that exist for our wine brands in key markets around the world."

With regards to the employment impact of the changes the TWE spokesperson said that "overall there will be some limited job losses" but that the company hopes many of the people employed at the wineries would remain under the new ownership.

He added: "In some of the supply chain changes, there will be some job losses at Karadoc in the warehousing and packaging side of things but we're hoping to have some job gains at Wolf Blass, as a total package there will be a small number of job losses."

The Shout Team

The leading online news service for Australia's beer, wine, spirits and hospitality industries.

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