Penfolds buys a Chateau!

Treasury Wine Estates(TWE) announced yesterday that they have just bought Chateau Cambon la Pelouse in the Medoc region of Bordeaux.This is the first acquisition in France for one of the largest premium wine producers in Australia, New Zealand and America.

TWE used to be the wine division of Foster’s beer. Beringer Blass, Southcorp and Penfolds are all in the TWE stable. TWE was spun off from Fosters in 2011 and has had a chequered financial rollercoater ever since. There has been significant write downs and class actions due to destroying cheap stock in the USA.

TWE is an enormous business employing over 3400 people and has a turnover of over 2.5 billion AUD. However under CEO, Michael Clarke, TWE has had significant growth predominantly based on North East Asia. The share price has risen from A$4 when Clarke took on his role in 2014 to a current price of $A17.08 (16th August 2019)

TWE have some of the most iconic Australian brands within their portfolio…..Penfolds, Lindemans and Rosemount are the leaders, but Seppelt, Leo Buring, Wolf Blass and Wynn’s are also strong quality brands with great reputations.

It is interesting to see that TWE have only now purchased a producer in France. They have previously had joint ventures in Champagne with Thienot. TWE have also invested extensively in the USA with barnds such as Beaulieu Vineyards, Beringer, Stag’s Leap and Sterling amongst others.

Chateau Cambon la Pelouse have 65 hectares (160 acres) in the Haut Medoc appellation, with a small vineyard of half a hectare in the prestigious Margaux appellation. The Chateau employs 13 full time staff and has a good reputation for good quality well priced wines. The Chateau is not classified in the 1855 classification, but it is a Cru Bourgeois.

So why does Treasury Wine Estates buy into one of the most classical wine regions of the world?

According to Derek Nichol, Supply Chain Director, Europe for TWE, ‘France is an important sourcing region for TWE, so we are delighted to announce this agreement.’ They might not own any producers in France up to now, but they have certainly been busy sourcing wines.

The expansion and profitability for TWE has come through promoting their branded wines(and other brands) via their own distribution outlets into the developing Chinese markets.

Chateau Cambon la Pelouse might be a slightly different marketing proposition than some of the other TWE brands, but the Chinese interest in Bordeaux wines is significant.

So, let’s see how an established classic wine region such as Bordeaux performs with the know-how of new world marketeers and sales distribution. An exciting story to follow. Treasury Wine Estates has a vision to be the most celebrated wine company. After years of consolidation, takeovers and write downs, TWE seem to have a clear vertical integrated business and they seem to be operating with the right wines in the right markets.

The actual amount paid for Chateau Cambon la Pelouse was not divulged by Treasury Wine Estates.