<\/p>\n
Napa Valley\u2019s Sterling Vineyards, pictured in 2023, is a Treasury Wine Estate brand that could potentially be sold as part of the company\u2019s downsizing. \u201cWe are not commenting on specific brand timelines or future portfolio decisions,\u201d a Treasury spokesperson said.<\/p>\n
Brian L. Frank\/Special to The Chronicle<\/p>\n
Another major wine conglomerate is downsizing amid record declines in U.S. alcohol consumption and wine sales.\u00a0<\/p>\n
The Australia-based Treasury Wine Estates\u00a0\u2014 the seventh-largest U.S. wine producer<\/a> that\u2019s best-known for owning Australia\u2019s Penfolds and historic Napa Valley wineries Beringer Vineyards and Beaulieu Vineyard\u00a0\u2014 announced that it will divest a significant portion of its wine portfolio over the next few years.\u00a0<\/p>\n The news comes one year after Constellation Brands announced it was offloading the majority of its wine portfolio<\/a> to the Wine Group, now the second-largest U.S. wine producer. In recent months, numerous other U.S. wine conglomerates have sold assets<\/a>, shut down wineries<\/a> and laid off employees<\/a> as the wine crisis deepens.\u00a0\u00a0<\/p>\n Article continues below this ad<\/p>\n During Treasury\u2019s 2026 Investor Day on June 4, the company presented a plan to turn around the company by focusing on luxury and lighter, low- and no-alcohol wines. Currently, Treasury owns 76 brands. It plans to cut that number by more than half, to fewer than 30. In doing so, it will prioritize its investment in just 10 brands, including Penfolds, Daou and Napa Valley\u2019s Beaulieu, Frank Family Vineyards and Stags\u2019 Leap Winery. Notably, Napa Valley\u2019s Beringer, Sterling Vineyards and Etude Winery were not on the list.\u00a0<\/p>\n There have been ongoing signs of trouble for Treasury: Six months ago, the public company announced a $450 million writedown<\/a> of its U.S. business and suspended dividend payments to shareholders<\/a>, causing its stock price to plummet. The new strategy comes just a few years after Treasury went on a major California winery acquisition spree. In 2021, the company paid $315 million for Frank Family Vineyards<\/a>, then nearly $1 billion for Paso Robles winery Daou<\/a> in 2023. Treasury is also set to complete a major, and likely costly, transformation of Beaulieu Vineyard this summer.\u00a0<\/p>\n Frank Family Vineyards, pictured in 2023, is one of 10 brands that Treasury is prioritizing investment in as part of its new plan announced on June 4.\u00a0<\/p>\n Juliana Yamada\/The Chronicle<\/p>\n In April, former chief operating officer Robert Foye\u00a0\u2014 who left the company in 2019 but recently became a shareholder by investing 1 million Australian dollars\u00a0\u2014 publicly criticized Treasury<\/a> and called for an \u201caccelerated sense of urgency\u201d to navigate the current market challenges. Earlier this month, Foye told the Chronicle he felt Treasury was focused on \u201cvolume chasing and order taking, rather than building the business and really trying to focus on building the brands.\u201d He also said he believed the company overpaid \u201cby $600 million\u201d for Daou. Share prices had dropped to below $4, which he said was \u201cthe same level the stock was at when I started (at Treasury) in 2014.\u201d<\/p>\n San Francisco Chronicle Logo<\/p>\n Make us a Preferred Source to get more of our news when you search.<\/p>\n <\/p>\n Add Preferred Source<\/p>\n <\/a><\/p>\n Foye said today that he was encouraged by Treasury\u2019s Investor Day presentation. \u201cI thought overall, it was a relatively good, positive day,\u201d he said, though he was critical of the company\u2019s \u201clack of detail.\u201d<\/p>\n Article continues below this ad<\/p>\n In an effort to reduce production volume and inventory\u00a0\u2014 and reduce annual costs by roughly 100 million Australian dollars\u00a0\u2014 Treasury said that over the next four years, in addition to selling some wine brands, it will also significantly reduce its vineyard acreage throughout California by selling vineyards it owns, ending vineyard leases and not renewing grape contracts.\u00a0<\/p>\n The company will also consolidate the production of Frank Family and Stags\u2019 Leap at its St. Helena winery, which it plans to transform into a luxury production hub. Treasury did not specify which vineyards or wineries it will divest, but Foye surmised it will likely be wine brands priced at less than $20 per bottle, and vineyards growing grapes for such wines.<\/p>\n The announcement has already had a positive impact on Treasury\u2019s stock, which dropped by more than 50% in the past year. It was up 13% to $4.66 a share in the past 24 hours. One year ago, shares cost $8.22.<\/p>\n The future of two of Treasury\u2019s legacy Napa Valley brands\u00a0\u2014 Sterling, which was severely damaged in the 2020 Glass Fire<\/a> and reopened following a massive renovation<\/a> just three years ago, and Beringer, founded in 1876\u00a0\u2014 is unclear. Will Treasury look to sell them? While the market is soft, the history, name recognition and real estate of both would likely be compelling to other buyers. \u201cBeringer and Sterling play important roles in the U.S. market and will continue to support customer and consumer needs during the transition period,\u201d a Treasury spokesperson said. \u201cWe are not commenting on specific brand timelines or future portfolio decisions.\u201d<\/p>\n Article continues below this ad<\/p>\n To Foye\u2019s point, some of their wines, such as Beringer\u2019s White Zinfandel, are under $20, but each winery also produces bottles in the luxury tier. \u201cI think (Treasury) was purposefully kind of a little vague, because they don\u2019t have a final plan,\u201d he said.\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"Napa Valley\u2019s Sterling Vineyards, pictured in 2023, is a Treasury Wine Estate brand that could potentially be sold…\n","protected":false},"author":2,"featured_media":347791,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[113897,7,9,8,413,3945,3937],"class_list":["post-347790","post","type-post","status-publish","format-standard","has-post-thumbnail","category-california","tag-alertable-wine-sfc","tag-california","tag-california-headlines","tag-california-news","tag-food","tag-wine","tag-wine-country"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/347790","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/comments?post=347790"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/347790\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media\/347791"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media?parent=347790"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/categories?post=347790"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/tags?post=347790"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}<\/p>\n