On Wednesday, Treasury Wine Estates announced further progress on its 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 agreement, The Wine Group will source and sell the Beringer Main & Vine, Beringer Founders’ Estate, Coastal Estates and Meridian brands in 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.
TWE has previously advised it is implementing plans intended to deliver a premium focused business in the Americas with broadly half the volume, similar earnings over time and progress towards a target regional EBITS margin of 25%.
TWE expects to generate a one-off net cash inflow of at least $300m as part of these plans, with The Wine Group deal generating cash proceeds of approximately $100m, providing a meaningful step towards this goal.
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”.