The Penfolds brand and its premium wines will be the central plank of a revamped Treasury Wine Estates (TWE), the global wine group’s chief executive says.
The extent of job losses and brand axings at TWE remains unclear, however, after yesterday’s briefing from chief executive Michael Clarke.
TWE, which owns more than 80 brands including Penfolds, Lindeman’s, Wynns and Wolf Blass, announced Tuesday morning it will slash hundreds of jobs as part of major cost cutting moves.
The flipside was that the money would be used to increase marketing and promotion spending by 50 per cent.
At a briefing for analysts on Tuesday afternoon, Clarke wouldn’t be drawn on where the cuts will be felt – but he did make it clear that Penfolds is the jewel in the company crown.
“Basically, it’s just over five per cent of our workforce that we’re addressing, but we’re not going to get into specific numbers on that front,” he said.
TWE has more than 3,500 employees globally and around 1000 in South Australia.
“There is a lot that needs to be fixed,” Clarke said.
The Clarke strategy will be to spend more on marketing luxury and premium brands such as Penfolds.
Some of the lower end brands that struggle to compete on price are expected to be axed, he said.
Discounting of middle level brands will also be pulled back.
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“I am not emotionally attached to any part of a business or any particular brands,” Clarke said, before adding: “If I’m totally honest, I am emotional about Penfolds … that’s a gem that I think we’ve done a good job with, and I think we can do an even better job with Penfolds.
“If we can do something good with Penfolds, we can probably do something good with the rest of our portfolio in luxury and mass prestige wines.”
The market reacted strongly to the new strategy and TWE’s revelation that it had been the subject of a takeover bid.
By day’s end the share price had jumped 18 per cent, from $4.07 to $4.80.
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