Forty years ago, Australian wine professionals used to talk about the PLO. These initials did not refer to the then-powerful Palestine Liberation Organisation, but to Penfolds (founded 1844), Lindeman's (1843) and Orlando (1847), the three giants of their industry. At the time, Penfolds, along with its owners the Tooth brewery, had recently been acquired by a shipping business called the Adelaide Steamship Co. Lindeman's belonged to the US tobacco giant Philip Morris, and Orlando, subsequently home of Jacobs Creek, was a subsidiary of Colmans of Norwich, a British firm best known for its mustard and cleaning products.
Penfolds then bought Lindeman's and subsequently became part of a ragbag of brands that, under the corporate umbrella of Southcorp, claimed to be the seventh biggest wine producer in the world. Among the other historic names it owned were Queen Adelaide, Wynns Coonawarra Estate, Leo Buring, Seppelt, Hungerford Hill, Kaiser Stuhl, Seaview, Killawarra, Tulloch, Tollana, Rouge Homme and Matthew Lang, as well as younger brands, Coldstream Hills and Devil's Lair. This last pair, along with Wynns, Leo Buring, Seppelt, Lindemans and Penfolds all produced wines that were among the finest in Australia.
Further consolidation and subsequent acquisition by the brewer, Foster's, swelled the portfolio to include Rosemount, once one of Australia's most successful exporters, the sparkling wine specialist Yellowglen, Mildara and Wolf Blass, a brand credited with pioneering affordable premium red wine that won top medals at all the regional and national wine competitions.
It is worth considering this history in the context of the announcement that, in the face of "challenging market conditions... across all markets", Treasury Wine Estates, the identity Foster's adopted for its wine division in 2010, is to sell Lindeman's, Yellowglen and Wolf Blass, along with Blossom Hill, an entry-level brand it bought from Diageo in 2015. These are all being disposed of because they are "low-end commercial" brands.
Revealingly, Yellowglen is not included in the list of 20 'renowned brands' on Treasury's website. But when it and the other three disposals are removed, what will remain? Eight US brands, including Stags Leap, Sterling, Beringer and the recently - and very expensively - acquired Frank Family and Daou. There is also Castello di Gabbiano in Italy, Matua in New Zealand; a quartet of regional Australian brands - Seppelt, Wynn's, St Hubert's and Pepperjack - and the inexpensive, Squealing Pig, 19 Crimes, and of course Penfolds, all of which now cover more than one country of origin.
In other words, the business that was once Australia's biggest wine producer and the seventh largest on the planet, now has just four all-Australian brands.
In July it was rumoured that Treasury was interested in buying the English sparkling wine brand, Chapel Down, but the company moved to dismiss these stories. Now, industry observers and TWE shareholders will decide for themselves how much sense the remaining portfolio makes, whether further disposals and acquisitions are to be expected, and if the Melbourne-based giant has any interest in investing in the Australian industry.
Or if, indeed, it might even spin off the jewel in its crown, Penfolds, as a separate entity with an independent IPO, This move was seriously considered following a “comprehensive strategic review of its operations” in 2020, but it was canceled due to the COVID-19 pandemic. At the time, the then-CEO Michael Clarke, reported that Penfolds accounted for about ten percent of the company’s sales volume but generated well over half of its revenue.
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