By Deborah Jackson, editor National Liquor News

Treasury Wine Estates plans to remove up to $30 million in annual costs from its supply chain network globally by 2020 as it moves into the second phase of its supply chain optimisation.

This follows on from phase one of the company’s supply chain optimisation, which saw an accelerated focus on the luxury and masstige versus commercial portfolios globally.

The second phase of cost cutting will consolidate or divest supply chain infrastructure as well as optimising returns on underperforming assets, and simplifying and optimising logistics, warehousing and freight management globally.

The cost cuts are expected to benefit the Americas by 50 per cent, and the Australia and New Zealand, and Europe, Middle East and Africa regions by a combined 50 per cent.

TWE will recognise a provision in fiscal 2016 for a cash cost of around $14 million and a non-cash asset write-down of $20 to $30 million, relating to production assets including vineyards, wineries, packaging and warehousing facilities earmarked for closure or sale.

Michael Clarke, TWE’s CEO, said: “I am delighted with our company’s progress in the fiscal year-to-date. The accelerated momentum in our business continues to be delivered across all regions, most notably Asia.

“TWE’s strategy of driving top line momentum, investing in our priority brands, enhancing both existing and new route-to-market while reducing cost and complexity is continuing to deliver improved returns for our company and for our shareholders.

“Today’s announcement demonstrates that we are successfully transitioning TWE from an order-taking, agricultural company to a more efficient, brand-led marketing organisation. Right-sizing our production footprint, improving our Return on Capital Employed and optimising our global supply chain network are crucial steps on this journey.”

The Shout Team

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

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