NEWS: A possible Penfolds demerger?

[Sean]

deleted

[marsalla]

Thats not unscrambling the egg, thats more like trying to pull the egg back out of a iced sponge cake, and keeping the rest of the sponge intact.

[Mahmoud Ali]

I can't help thinking that it must be demoralizing to work for any of the wineries owned by Treasury. They surely know that Treasury's foremost concern is anything but the wine or the winery.

[mjs]

I can't help thinking that it must be demoralizing to work for any of the wineries owned by Treasury. They surely know that Treasury's foremost concern is anything but the wine or the winery.

Just ask Brett Sharpe at Lindemans Coonawarra!

[phillisc]

I can't help thinking that it must be demoralizing to work for any of the wineries owned by Treasury. They surely know that Treasury's foremost concern is anything but the wine or the winery.

Just ask Brett Sharpe at Lindemans Coonawarra!

+1
Sue Hodder at Wynns
Adam Carnaby at Seppelts

Must be very frustrating that their level of autonomy and decision making is greatly diminished. Damm sure that all three would love more of a say, but just go quietly.
I am of two minds here with this split, if the whole lot tanks or one side becomes ultra exclusive then too bad.
Or might be time that this group is finally broken up/bought out and better things lie in wait...who knows, finally might buy some shares.
Cheers Craig

[Benchmark]

I was under the impression Wynns still operated with a certain amount of autonomy?

Could be, often, very wrong.

[Ian S]

Thats not unscrambling the egg, thats more like trying to pull the egg back out of a iced sponge cake, and keeping the rest of the sponge intact.

LOL, but I suspect rather accurate

Back in the days of Southcorp, I would have applauded such a split. Now I really don't care. I will only offer speculation that they are setting it up like this in the hope that someone else (e.g. LVMH) will swoop in for Penfolds, though I'm not so sure that would happen in the near future.

[marsalla]

Thats not unscrambling the egg, thats more like trying to pull the egg back out of a iced sponge cake, and keeping the rest of the sponge intact.

LOL, but I suspect rather accurate

Back in the days of Southcorp, I would have applauded such a split. Now I really don't care. I will only offer speculation that they are setting it up like this in the hope that someone else (e.g. LVMH) will swoop in for Penfolds, though I'm not so sure that would happen in the near future.

Funny that, I may have cared once being ex Southcorp, , but now I really dont care (although I must a bit as I am posting this, something I rarely do)

I predict it is just a ploy to boost their falling share price, and will fade with a new CEO.

[sjw_11]

Thats not unscrambling the egg, thats more like trying to pull the egg back out of a iced sponge cake, and keeping the rest of the sponge intact.

LOL, but I suspect rather accurate

Back in the days of Southcorp, I would have applauded such a split. Now I really don't care. I will only offer speculation that they are setting it up like this in the hope that someone else (e.g. LVMH) will swoop in for Penfolds, though I'm not so sure that would happen in the near future.

Yes this sounds the likely thinking to me too... create a reasonably big (ASX 50-100) company with a pure "luxe" twist, hope it gets bought out a big premium and then who cares what happens to the now minnow running all the other brands.

If it really is just the Penfolds brand in the lux-co, I would be watching the smaller "New TWE" to see if at some point it might falter and there was a chance to extract just the Wynns brand and vineyards... (if I had the millions required to implement such a move!). Since they sold the Seppelts winery etc that is probably the only brand with a fully coherent structure of its own (maybe Coldstream Hills?)

https://www.tweglobal.com/brands

[n4sir]

It seems a strange time right now for Treasury to be pondering this move... for years when they (and Fosters) were trying to flog off any part of the old Sothcorp/Mildara Blass/Rosemount empire they could, Penfolds was the only thing others wanted to buy - and they wanted thing they desperately wanted to hold on to...

I will call it for what it probably is... an attempt by the head honcho from Coca Cola to try and boost the share price (and his bonus) whether it goes ahead or not. In short, it will be a capital raising exercise while their golden goose has taken a massive hit courtesy of the Co-Vid 19 crisis - they will try and float off what they can while still tryng to retain control to fatten their $$$ until the storm passes.

As others have mentioned here, the rest of the Treasury empire has had its soul so ruthlessly ripped out in the name of cost cutting, rationalization and short term profits, so much that when Penfolds is split off the rest isn't really worth that much. While the media have grabbed hold of the prospect of a spin off I am guessing it's still talk at this stage, because this is a very dangerous long term game move they are contemplating.

[n4sir]

I was under the impression Wynns still operated with a certain amount of autonomy?

Less than you think. The wines are now being trucked to the Karadoc winery and made there. Plus they have lost a lot of their iconic Cabernet vineyards to Penfolds to pump out a truckload more Bin 389 & 407 (hence you will see a lot more Shiraz based/dominant Wynns single vineyard releases in future). I am amazed Sue Hodder has stuck around for this to be honest, it must be gutting for her...

[Polymer]

Could make sense...

Penfolds is doing well...They're probably propping up the rest of the company. If they spin it off, they can concentrate on their own thing and there is more dedication to the brand (if it wasn't that way already). Plus they're not dragged down by the rest of their under performers.

Would be interesting to see how assets are split and how this may change access to grapes.

[phillisc]

I was under the impression Wynns still operated with a certain amount of autonomy?

Less than you think. The wines are now being trucked to the Karadoc winery and made there. Plus they have lost a lot of their iconic Cabernet vineyards to Penfolds to pump out a truckload more Bin 389 & 407 (hence you will see a lot more Shiraz based/dominant Wynns single vineyard releases in future). I am amazed Sue Hodder has stuck around for this to be honest, it must be gutting for her...

Hi Ian, good to see you posting again, comments and insights are most appreciated.
Yes the Penfolds argy bargy in Coonawarra has been going on since the 80s when the 'best' fruit made it into 707 and whilst Wynns, Lindies and Rouge Homme had their individual blocks, top shelf fruit went elsewhere. I smile when I think of what has happened to Jamiesons Run, Rosemount, Mildara, Rouge Homme, all/some still being made, but Mildara for example is now half the price and not Coonawarra, its Limestone Coast, (probably Robe) Rouge Homme equally similar.
I also smile, apart from a sign on the road and a single release of Bin 620, Pennies has no presence in Coonawarra, yet by far and away has the greatest clout. Stranger still, one of only two single vineyard wines in their portfolio, (Bin 128) is a very very ordinary wine, often green, acidic and short on the palate and 4-5 times the price of Wynns Shiraz. Pennies should graft it over, some of those vines are 50 years old.
Think you and others here are right, its a money grab. I'm not worried about Pennies, '16 St Henri and Magill were my last buys and a case of '19 Bin 51 Riesling in the bargain bin at a large chain was too good to pass up, but that's it.

As for Wynns I am a little more attached to, was going to stop purchasing after the '12s, but will see out the rest of the decade. Your comments regarding Shiraz wines are intriguing, at the time of the 1990 Michael release at $30 CD price, staff admitted that this would be a hard sell, it still is to some degree and with a BL and V&A added to the portfolio, this is where the lack of autonomy comes in. Who made or was consulted re decisions about the Samuel Wynn range "miles from effing nowhere Shiraz"...please. The marketing bullshit stated to entice millennials...WTF!!?? Samuel Wynn was the one who got this all started in the modern era, and they pay him back with this rubbish. Equally, the disastrous Banker (rhymes with something but just can't put my finger on it) range is a really poor decision. You could also say the same for The Siding and The Gables. Perhaps the range needs a big shake up and a severe prune.
Not all doom and gloom though, have plenty of Wynns to drink, might be bargains a plenty from excess stock sitting in warehouses, bottom feeders like me might be able to swoop in.
Gallo Bros. in California were rumoured at some stage to have made an offer of $USD 400 M for Wynns and Seppelts, but Southcorp said no. That would be about what its worth now ($AUD 800 M with the exchange rate).
My 2c.

Cheers Craig

[Mike Hawkins]

If thIs happens, Penfolds will be owned by one of the global luxury conglomerates by 2024.. Think LVMH

[Ian S]

This thread prompted me to open a 1998 Wynns John Riddoch, and it's a great reminder of the enjoyment to be had from their wines. It really does embody what I look for in Coonawarra CS, with a violet edge to the blackcurrant fruit, but also with black olive and a touch of green pepper giving a savoury balance. Still got plenty of potential, but is certainly enjoyable now. Perhaps more than any Aussie winery, I find Wynns reds to offer both early pleasure and great staying power, and this is arguably still a bit of a juvenile.

[Mahmoud Ali]

Ian,

To say that the 1998 Wynns John Riddoch has staying power is an understatement. I tasted this at cellar door and thought it was a powerful expression of Coonawarra Cabernet, in fact any cabernet. However despite the association of Wynns with Penfolds I don't usually think about wynns when the conversation turn to Penfold's, and I don't really know why.

It was my tasting of the 1998 John Riddoch that prompted me to buy a few bottles of the 1994 when I returned to Canada.

[Ian S]

Hi Mahmoud
I suspect the mental separation is because the wine styles diverge so much. I find Wynns more of a sabre, vs. Penfolds a two handed hammer. Both effective in their own way and each has their place.
A small caveat. I'm not so convinced by Wynns Shiraz wines, but then it's a grape I seem to prefer at more marginal ripeness.
Regards
Ian

[Mahmoud Ali]

Hi Ian,
I like your analogy. Apart from the 1998 Michael I haven't been particularly impressed with their shiraz. However, that being said, I could not resist picking up a couple of bottles of Wynn's Oven Valley Burgundy to put away. Yet another iconic Australian wine thastv was cast away.

Cheers ........... Mahmoud.