Endeavour Group has unveiled a restructure of its Pinnacle Drinks business as it looks to cut costs and trim its premium wine range.
In a statement today (27 May), the Australian group said it will reposition Pinnacle as an “asset-light, customer-led” portfolio.
The plan is designed to focus investment on brands and regions that deliver the “strongest returns and resonate with customers”.
As part of the restructuring, Endeavour will seek a new owner for the Oakridge wine brand and operation in the Yarra Valley.
It will retain the Chapel Hill, Riddoch Coonawarra and Krondorf Barossa brands. However, their vineyards and physical assets will be sold.
The Chapel Hill operations will close at the end of June.
Endeavour, which owns drinks retailer Dan Murphy’s, also 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.
As part of the overhaul, Endeavour will also exit or sell non-core winery and agricultural assets. It will consolidate winery operations from seven to three “strategically important” sites.
The group will retain Cape Mentelle in Western Australia’s Margaret River, the Isabel Estate in New Zealand’s Marlborough region and the Dorrien Estate in South Australia’s Barossa Valley.
It will also trim 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.
Alongside the asset changes, Endeavour will rationalise the domestic Pinnacle product range. It will 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 Pinnacle restructure forms part of the company’s broader strategy to drive “differentiated revenue growth” and improve “operational efficiency”. The company added it is “actively working” to reduce complexity in the business to cut costs and optimise its asset base.
The initiatives include growing retail revenue by “reinforcing price leadership” at Dan Murphy’s, and increasing investment in the group’s hotel business.
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