CHATEAU REYNELLA 175 JOBS GONE

Chateau Reynella photo Kate Elmes

THIS MORNING'S PRESS RELEASES
FROM ACCOLADE AND TREASURY

10:00am July 24, 2012 (Adelaide, Australia)

ACCOLADE WINES MAKES GROUND-BREAKING CHANGE

Accolade Wines and Treasury Wine Estates (TWE) today announced a major transformation of the wine industry entering into reciprocal bottling and packaging contracts that will see Accolade Wines bottle for TWE in the UK and TWE bottle for Accolade Wines in Australia.

Accolade Wines Chief Executive Troy Christensen (left) said the agreements would strengthen the Australian wine industry by improving the efficiencies of both Accolade Wines and TWE.

"This ground-breaking agreement will enable each of us to secure economies of scale in each region," Mr Christensen said.

"Our decision to enter a reciprocal bottling agreement with TWE underpins Accolade Wines continued success in Australia and globally.

"This agreement is important for the thousands of people in Australia and globally who rely on our business, including employees, customers, grapegrowers and other suppliers. It will allow us to put more effort into growing the sales of Australian wine in Asia and North America.

"We are delighted to partner with TWE in the UK where we will undertake all of TWE's UK bottling. This will move to Accolade Park in Bristol which will increase production there by 30pc."

Mr Christensen said changing market dynamics had created surplus Australian bottling capacity which was holding back the Australian wine industry.

"For a number of years we have researched alternatives to avoid outsourcing our Reynella bottling and distribution facility, including relocating assets within the business. No other option delivered such long term benefits.

"We were faced with the difficult realisation that the best option for our business, and for the Australian industry was to ensure that the most efficient facilities were fully utilised even if they were not our own.

"This is a very significant decision for the Australian wine industry as it creates a new paradigm for the industry. It recognises that we are in the business of producing wine and getting it to consumers. Just as we do not own all our own vineyards, or all our own trucks, we don't have to own every piece of equipment that helps us get wine to the consumers' glass."

Mr Christensen said the decision was not taken lightly because it means that 175 employees at Reynella will be made redundant.

"All employees made redundant will receive their full redundancy entitlements and further support in the form of outplacement services to help find new jobs," Mr Christensen said.

Approximately 20 of the redundancies relate to a separate arrangement where Accolade Wines will outsource its Reynella warehousing and distribution to MacKenzie Hillebrand's facilities at Outer Harbor, South Australia.

"We are working with Treasury and separately with MacKenzie Hillebrand on plans that we anticipate will see us fully transitioned by January 2013," Mr Christensen said.

Accolade Wines and Treasury Wine Estates Agreement

There is compelling business logic behind the agreement between Accolade Wines and Treasury Wine Estates.

The agreement recognises that optimum business efficiency is achieved when capacity at the most efficient operations is fully utilised.

The market conditions described above have had negative impacts on Accolade Wines bottling facilities which have not been operating at full capacity for some time. Accolade Wines has made significant efforts to win contract bottling work to keep its plant operational however due to the prevailing industry conditions cited previously there is significant spare bottling capacity within the Australian industry.

Outsourcing Accolade Wines' bottling operation to Treasury Wine Estates in Australia builds on a partnership developed in the UK where Accolade Wines has been producing all European Cask volume for Treasury Wine Estates. Under the terms of this agreement Accolade Wines will now takeover all the bottling for Treasury Wines Estates in the UK.

The business case for the agreement is compelling. The agreement underpins Accolade Wines continued success in Australia and globally. This arrangement enables Accolade Wines to increase investment towards distributing Australian wine in Asia and North America.

All Accolade Wines' brands will still be made from grapes sourced from the same regions, the same vineyards and processed under the supervision of Accolade Wines' winemakers. The only change in the production of our wine will be that the wines will be sent to a different plant for bottling and packaging.

The business relationship between Accolade Wines and Treasury Wine Estates will remain that of principal and contractor. In Australia Treasury Wine Estates will pack for Accolade Wines and in the UK Accolade will pack for Treasury Wine Estates.

It is expected the transition will be completed by January 2013.

The 2ha John Reynell vineyard Constellation had removed from the Heritage List to make way for the intensive housing which now covers the site.

 24 July 2012

TREASURY WINE ESTATES DRIVES SUPPLY CHAIN EFFICIENCY IN PACKAGING

Treasury Wine Estates (ASX: TWE) is pleased to announce it has signed contractual terms with Accolade Wines for new packaging arrangements between the two companies. Under the contract announced today, TWE will pack wine for Accolade in  Australia with Accolade packing wine for TWE in the United Kingdom.

Stuart McNab, Chief Supply Officer for TWE said the new arrangements will utilise the best and most efficient assets of both companies.

"We have put a big focus on increasing efficiencies in our supply network and this new arrangement with Accolade will leverage these efficiencies by utilising spare capacity in our Australian facilities."

Historically, TWE has used several service providers for wine packaging in England, but under the new arrangements, the company will consolidate all United Kingdom packaging into Accolade Park, in Bristol.

David Dearie, Chief Executive Officer for TWE says these packaging arrangements strengthen our global supply chain and position Treasury Wine Estates for future sales growth.

"Both businesses compete in the global wine market and these new arrangements will enable us to better capitalise on our resources and state of the art facilities in the regions where we can best leverage the benefits."

The new arrangements will commence over the coming weeks with both companies increasing their volumes over a six month period to meet full planned packaging volumes by January 2013.

These new arrangements are part of a longer-term supply optimisation strategy aimed at better utilisation of TWE's packaging and distribution assets around the globe.

For background, type REYNELLA into the search box at the top left.