Penfolds owner Treasury Wine Estates loses California distributor, downgrades full-year earnings
Penfolds owner Treasury Wine Estates will be scrambling to find a new path into the Californian market after its local distributor announced it will cease operations later this year.
The sudden decision by Republic National Distributing Company to cease operations in California from September will be a serious blow for the wine maker, with the shuttered distributor responsible for about 25 per cent of TWE's sales for its Americas division and 10 per cent of total group sales.
In an update to the Australian Securities Exchange on Tuesday, TWE also blamed weaker consumer demand and economic uncertainty in the US for downgrading its full-year earnings forecast.
The company said these factors were impacting the wine category performance at price points below $US15 ($23) a bottle. TWE is also behind brands Wynn's, Pepperjack, Squealing Pig and the Snoop Dogg-backed 19 Crimes.
TWE now expects earnings for the 2025 financial year to hit at about $770 million, having previously guided around $780m.
'TWE has begun evaluating alternative distribution arrangements for its portfolio in California to determine an appropriate path forward,' the company said.
'As the leading luxury wine supplier in the US market, TWE is confident that its history working with an extensive network of US distributors, combined with its proven experience in effectively managing distributor changes . . . positions the company strongly to transition to a new route to market in California in the near-term.'
The loss of the Californian distributor will pose as a major challenge for incoming TWE chief Sam Fischer, who last month was poached from alcohol giant Lion, behind popular beer brand XXXX.
TWE shares closed up 0.5 per cent to $8.14 on Tuesday.
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