Endeavour Group to sell wineries and vineyards

[Matt@5453]

Anyone with some spare cash??

Endeavour Group is selling the Chapel Hill winery, cellar door and vineyards, with production moved to Dorrien Estate in the Barossa. The Chapel Hill brand will be retained.

Chapel Hill operations will close at the end of June.

The Riddoch Coonawarra and Krondorf Barossa vineyards will also be sold as Endeavour reduces its own grape production by more than 80 percent.

Endeavour – which owns Dan Murphy’s and BWS – says that it will also “seek a new owner” for the Oakridge brand and winery in the Yarra Valley.

It will be sold as a going concern and the company says it is “business as usual” at Oakridge.

The company won’t be renewing the lease of Josef Chromy in Tasmania.

“Assets associated with the business are under review and a decision will be made before the end of the lease,” the company says.

Endeavour says it is reshaping the Pinnacle Drinks business to an “asset-light, customer-led portfolio”.

“Resulting in approximately 99 percent flexible sourcing of purchased bulk wine and grapes from the viticulture market,” Endeavour says.

Winery operations will be consolidated from seven sites to three, with the remaining three deemed “strategically important for end-to-end regional strength”.

Cape Mentelle in the Margaret River, Isabel Estate in the Marlborough region of New Zealand and Dorrien Estate in the Barossa Valley will be retained as strategically important assets that underpin premium customer propositions, production and sourcing.

A single high-scale packaging facility will be retained at Vinpac Angaston in the Barossa Valley, with the Vinpac McLaren Vale bottling facility to close later this calendar year.

The domestic Pinnacle product range will be further rationalised, sharpening focus on the brands with the strongest retail demand and customer engagement, the company says.

Endeavour Group managing director and CEO Jayne Hrdlicka said, “Todayʼs decisions reflect a clear choice to refocus Pinnacle on its primary role – serving our retail businesses and the customers that drive growth.”

“By concentrating on the brands and assets that customers value most, we are building a more focused private label portfolio.”

A spokesman for Endeavour – which was spun off from Woolworths Group in 2019 – says it will be reducing its own brands by 30 to 40 percent.

Endeavour purchased Krondorf Barossa in 2011, Chapel Hill and Riddoch Coonawarra in 2019, Oakridge Wines in 2021 and Cape Mentelle in 2023.

Endeavour bought Josef Chromy Wines in 2022 in partnership with Warakirri Asset Management, one of Australia’s leading agricultural investment managers.

Adelaide professor Tom Nelson planted the first vines were planted at Chapel Hill in 1972 and the first wines were made in 1975.

The Gerard family took ownership of the winery in 1985 and winemaker Pam Dunsford made some of Australia’s best wines.

In 2022 Dunsford won the Maurice O’Shea Award for her contribution to the Australian wine industry.

[Chuck]

Good luck trying to recover the original investment. Not much of a market for wineries as the wine glut continues. This has been going on for years and will likely continue for a long time. There may need to be another wine pull aka 1980s.

[phillisc]

Indeed TWE's share price down to $4: 50, only another couple of dollars to go and I might be in.
Simply, it aint going to be me that blinks first...2 billion plus litres in tanks, bottles, warehouses.
Cheers Craig

[BHCC1]

Tough times for the industry indeed but Oakridge and others were always a questionable fit in a company built around pubs, pokies and big box liquor retail. Let’s hope they find sympathetic new ownership.
Not sure the one’s they have retained have a secure future either.

[BHCC1]

I think the sad and underlying driver here is a push by the corporate sector to commodify wine production. We see it here with Endeavour retaining brands, consolidating winery production assets and divesting vineyards - goodbye diversity and hello mass produced, made to a formula nice but boring swill.
Front labels and marketing suggesting products differences but the ownership declared on the back label confirming that it’s all come from the same place.

[Chuck]

With so much significant discounting happening TWE may be forced to reduce prices much more or face slowing sales and ballooning inventory. An accountant's worst nightmare. IMHO TWE have been living on borrowed time relying on its premium brand recognition while the rest have quietly caught up. (when was the last time you bought Pennies? for me about 30+ years ago) When wine becomes commoditised and people lose faith in the premium labels it could get ugly. This slow motion train crash may last at least 5-10 years. First to go will be Riverland growers. They produce a phenomenal amount of grapes that no-one will buy now. If this downward trend in consumption continue it could get ugly. I wouldn't be buying TWE any time soon. Only saving grace for TWE is drinkers are drinking less but higher quality.

[phillisc]

I'm very happy to keep buying John Riddoch for $65 or Lindies for $27.
Apparently nobody under the age of 45 drinks Cabernet any more
Cheers Craig

[Ian S]

Yes, that statement reads like "we'll grab the cheapest bulk wine we can, and that's what will be going into those wines now". Ugh. A shame Cape Mentelle is in their portfolio.

[Mike Hawkins]

Cape Mentelle …. cheap wine with a ridiculous price tag

[I Love Shiraz]

Sad news, but not surprising. We are producing far too much wine, especially in varieties that are not as popular as they used to be - Shiraz and Cabernet Sauvignon. Most wineries are losing money. The industry needs a massive restructure.

[Chuck]

I was wondering why DM were giving away bottles of wine recently to online customers . One each from Oakridge and Chapel Hill. Makes sense now. They can't sell it so are giving it away. Good to see the new CEO is cleaning up the mess.

[GraemeG]

Strange that they were buying wineries so recently. I suppose some 'acquisitions' bloke had to justify his job. Looking at the press release in the OP, it doesn't bode especially well for anyone looking to buy interesting wines from DMs. Why would you keep the Chapel Hill brand unless you were going to take it way downmarket? Unless you can build the volumes way up, all you've done it gutted any value it may have had.
It's not like TWE haven't done all this before as a case study: sell physical assets, keep the brand name for some reason you haven't worked out, then mothball it, until it's worth nearly nothing. No-one under forty's even heard of Rouge Homme, for instance - it must have been worth nearly nothing to sell back to Redman. Ah well, they have a new CEO - no point in learning from the mistakes of others - gotta make them all yourself!

[Sean]

IMG_1918.jpeg

The boys at Different Drop had a chat with winemaker Dave Bicknell about life post Oakridge & other things.

To watch the video, just enter Different Drop + Bicknell in the YouTube search bar.

Also read on WBM that now ex-Chapel Hill winemaker Michael Fragos is moving on to Haselgrove in McLaren Vale.

[Chuck]

I now understand how Dan's was giving away single bottles of Oakridge Pinot and Chapel Hill Shiraz to loyal customers recently.

[I Love Shiraz]

Ed Merrison from Vininspo! podcast alsi interviewd Dave Bicknell. Link here: https://www.youtube.com/watch?v=CjH0MzWLENc& ... sf&index=1