Treasury Wine Estates announced today that it is making significant changes to its supply chain network in both the USA and Australia and that the Company has identified further opportunities to reduce its overhead cost base.

Supply chain optimisation

As foreshadowed at TWE's interim 2015 result announcement, the Company is now executing plans to extract supply chain optimisation savings and accelerate its separate focus on the Luxury & Masstige versus Commercial portfolios globally, by making significant changes to its supply chain network and cost base in both the USA and Australia.

United States of America

In the USA, TWE will consolidate its production facilities such that TWE's Asti winery in Sonoma County, California, will become surplus to the Company's production needs.

Asti's wine production will be transferred to other wineries within TWE's network to increase utilisation, with the majority of Commercial and Masstige wine production transferred to Paso Robles and Luxury wine transferred to Beringer.

These actions will increase utilisation at both facilities. Collectively, these steps will further facilitate TWE's separate focus on the Luxury & Masstige versus Commercial portfolios in the region.

Finally, packaging lines at TWE's Napa Bottling Centre (NBC) are being consolidated to further optimise production efficiency.

Australia

Consistent with actions taken in the USA, the packaging and warehousing of wines previously processed at Karadoc near Mildura Victoria, will now occur at TWE's stateof-the-art Wolf Blass facility in the Barossa, South Australia.

The phased closure of packaging and warehouse operations at Karadoc is due to be completed during fiscal 2016. As a result, the utilisation of the Wolf Blass packaging and warehousing facility will be significantly enhanced.

Furthermore, Commercial wine currently processed at TWE's Great Western and Wynn's Coonawarra facilities will be transferred to the Karadoc site, with Karadoc to become exclusively focused on the production of TWE's Australian Commercial wine portfolio.

At the same time, the processing of Masstige wine at Great Western and Wynns Coonawarra will be transferred to Wolf Blass. This will, in turn, result in increased Luxury wine processing and warehousing capacity at these sites.

As part of TWE's strategy to focus on fewer brands, TWE will also commence a sale process for excess assets in Australia including the Ryecroft winery, T'Gallant and Bailey's properties. The outcomes and any financial implications will be announced to the market at the appropriate time.

For more information, download the ASX Announcement (PDF, 245 KB)

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