The company behind Penfolds is making major changes to its global business as takeover speculation continues to swirl around the wine maker.
Treasury Wine Estates plans to ramp up promotions, cut costs and shift the time of year it releases Penfold vintages, to capitalise on celebrations like Thanksgiving and Chinese New Year.
Takeover speculation continues to follow wine maker, including rumours luxury goods brand LVMH, controlled by French tycoon Bernard Arnault, is interested in Treasury Wine, which has struggled in recent years with an underperforming US business.
Chief executive Michael Clarke said he’s focussed on turning around the business, not negotiating with potential buyers.
“We have a business to run independent on who may or may not own the business,” he said.
“My primary focus is the road map that we’ve laid out, which is to step up marketing, investment, take costs out, change Penfolds release date and also focus on the consumer.”
Treasury Wine announced plans to cut hundreds of job in May in the early stages of a turnaround plan, after rejecting a $3.05 billion takeover offer from US equity firm Kohlberg Kravis Roberts.
Mr Clarke on Wednesday refused to detail exactly how many jobs were being cut.
Under the next phase of changes, which will cost $260 million, the company will combine the annual release dates for new vintages of its Penfolds Bin series and Penfolds Icon & Luxury collection wines to October, rather than in March and May.
This would ensure the wines were on sale for longer and more readily available for key celebrations around the world, Mr Clarke said.
It will also help the company manage allocations and inventory levels with key customers around the world, and reduce the need to rush the wines out to the market.
Treasury upset investors last year when it destroyed $35 million of deteriorating wine after oversupplying the American market.
Investors welcomed the latest changes, with company’s shares gaining 24 cents, or five per cent, to $5.07, when the wider market fell.
Despite the cost of the latest restructure plans, Treasury Wine has not downgraded its 2013/14 earnings forecasts of between $230 million and $250 million.
However, Mr Clarke did not confirm whether the company was on track to meet that forecast, saying “I haven’t said we’ve delivered it. I also haven’t said we haven’t delivered it.”
Investors took Mr Clarke’s comments positively, CMC Markets analyst Michael McCarthy said.
“They’ve taken a glass half full approach,” he said.
As part of the changes, Treasury will also manage its operations in Asia, Europe, Middle East and Africa separately to its Australia-New Zealand business.