Is Treasury Wine Estates CEO Michael Clarke about to go shopping in the US?

Is Treasury Wine Estates CEO Michael Clarke about to go shopping in the US?

Treasury Wine Estates has embarked on an overhaul of its distribution agreements in 15 "key states" in the US.

The group, which announced its results for the first half of fiscal-2018 yesterday, said the changes are a priority, ahead of "executing further M&A activity". Speaking exclusively to just-drinks in August last year, CEO Michael Clarke said Treasury had "sent a signal" to potential acquisition targets through its success with its US portfolio in Asia.

The changes comprise:

  • Moving to a direct sales and distribution model in California and Washington - the company has appointed Classic Wines of California and Vehrs Distributing, in California and Washington, respectively
  • Switching to a hybrid sales and distribution model in Florida, collaborating with newly-appointed distributor partner Breakthru Beverage Group
  • Securing new distributor partners in a number of other states, including Breakthru Beverage Group in Illinois, Colorado, South Carolina and Minnesota, Johnson Brothers in Indiana, Hawaii, Iowa and West Virginia, Vehrs Distributing in Oregon and Specialty Imports in Alaska

The move has resulted in a reduction in shipments to some of its former partners, something that was highlighted in yesterday's results as being partly responsible for a slight fall in volumes in Treasury's first half.

CEO Clarke said: "Similar to business model changes we implemented in China, Canada and New Zealand, as well as the change in global Penfolds release date, route-to-market transformation in the US demonstrates the relentless focus we have at TWE to continue improving our regional business models.

"These important changes will also strengthen our ability to deliver value from any future acquisitions in the region".

As part of the move, Clarke's temporary co-location arrangement between Australia and California, which started in March last year, will be extended until the end of this year.

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Expert analysis

Top Growth Opportunities: Wine in the US

Top Growth Opportunities: Wine in the US

Top Growth Opportunities: Wine in the US, provides an overview of the Wine market, analyzing market data, demographic consumption patterns within the category, and the key consumer trends driving cons...read more