Endeavour Group to axe more than half of wineries in cost-saving bid
Australian wine group Endeavour has announced a strategic overhaul of its Pinnacle Drinks business, with non-core wineries and agricultural assets hitting the chopping block as it looks to slash costs and focus on its strongest brands.
In a statement released yesterday (27 May), the Sydney-headquartered group announced plans for a “strategic transformation” of its Pinnacle Drinks arm, which will see changes geared towards “repositioning the portfolio to focus on brands and regions that generate the strongest returns and resonate with customers”.
The Australian group said it will reshape Pinnacle as an “asset-light, customer-led portfolio”.
As part of this, winery operations will be cut back from seven sites to three in a bid to streamline production and packaging to a smaller number of high-scale sites.
The remaining hubs – Cape Mentelle in Western Australia’s Margaret River, Isabel Estate in the Marlborough region of New Zealand and Dorrien Estate in South Australia’s Barossa Valley – may be far apart geographically, but all are considered strategically important assets for end-to-end regional growth.
While the company will retain its Chapel Hill, Riddoch, Coonawarra and Krondorf Barossa brands, their vineyards and physical assets will be sold.
The Chapel Hill operations are also set to close at the end of June.
As part of the restructuring, Endeavour will seek a new owner for the Oakridge wine brand and operation in the Yarra Valley.
Endeavour also announced that it does not intend to renew its lease for Josef Chromy. A decision on assets linked to the business will be made before the lease ends.
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It will also cut back packaging operations, keeping one “high-scale” facility at Vinpac Angaston in the Barossa. The Vinpac McLaren Vale bottling facility is due to close later this calendar year.
In addition, Endeavour will rationalise the domestic Pinnacle product range, honing its focus on brands with the “strongest retail demand and customer engagement”.
The group is also cutting exposure to grape growing. It will reduce its own grape production by more than 80%, moving to about 99% flexible sourcing of purchased bulk wine and grapes from the broader viticulture market.
Endeavour Group managing director and CEO Jayne Hrdlicka said: “Today’s decisions reflect a clear choice to refocus Pinnacle on its primary role – serving our retail businesses and the customers that drive growth.
“By concentrating on the brands and assets that customers value most, we are building a more focused private-label portfolio.”
The overhaul follows a “detailed review of [Endeavour’s] premium wine portfolio,” according to Hrydlicka. The firm hopes that the changes will cut back on grape production by more than 80%, resulting in around 99% flexible sourcing of bulk wine and grapes from the viticulture market.
The initiatives include growing retail revenue by “reinforcing price leadership” at Dan Murphy’s, and increasing investment in the group’s hotel business.
Endeavour is aiming to hit A$300m of cost savings by fiscal 2029, including A$100m in 2027.
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