TWE secures long-term US licensing agreement

10 March, 2021 by Andy Young

Treasury Wine Estates (TWE) has announced it has reached an agreement with The Wine Group over several of its commercial tier brands in the TWE US portfolio.

The licensing agreement, effective from 9 March, will see The Wine Group will source and sell the Beringer Main & Vine, Beringer Founders’ Estate, Coastal Estates and Meridian brands in the Americas.

Advertisement

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.”

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.

Cate Hardy, CEO of The Wine Group, added: “The Wine Group is a leader in the industry with strong wine brands that deliver unbeatable value.

“The acquisition of these popular brands further positions The Wine Group as a global leader in wine. Adding these brands complements TWG’s leadership in the value segment alongside our growing portfolio of premium wines, introducing more consumers to our high quality wines at every price point.”

Earlier this year, at its first-half results, TWE said it was implementing plans to focus on its premium business in the Americas, with broadly half the volume and similar earnings over time taking the business towards a regional EBITS margin of 25 per cent.

TWE said it expects to generate one-off net cash inflow of at least $300m as part of these plans. The company added that The Wine Group announcement, will generate cash proceeds of approximately A$100m, and is a meaningful step towards these goals.