Treasury Wine Estates has announced plans to sell off some of its cheaper wine brands because consumers are shifting to higher-priced bottles of wine.
👉 Background: Treasury Wine Estates is the wine brand behind Penfolds, but also cheaper brands like Wolf Blass, Lindemans and Yellow Glen. But over the past few years, Treasury Wine Estates has experienced challenges due to tariffs in China and changing market conditions.
👉 What happened: Now, Treasury Wine Estates has announced plans to sell off some of its cheaper wine brands because consumers are shifting to higher-priced bottles of wine, but consuming less overall.
👉 What else: Analysts reckon they may only sell these cheaper brands for $100 million collectively because there’s limited demand from buyers for the lower margin wines. And that’s exactly why Treasury Wine wants to offload them - a little bit of brand portfolio management.
💡In business, managing a brand portfolio involves making decisions about which brands to grow, maintain, or prune.
💡Treasury Wine Estates’ has made the decision to sell off its lower-priced brands for profitability. That's because its premium brands, Penfolds and Daou Vineyards generate approximately 75% of Treasury Wine’s profits.
💡Treasury Wine isn’t the only alcohol brand to dust off the low-quality cobwebs. Pernod Ricard also announced last month it’s going to sell Jacob’s Creek to Accolade Wines. So now, Treasury will focus on higher-priced, higher-quality and higher-margin bottles of vino.
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