👉 Background: Treasury Wine Estates was spun off from Foster’s in 2011 and has since grown into one of the world’s biggest winemakers. It owns some of the big wine brands around the world such as Squealing Pig, 19 Crimes and Pepperjack as well as its cash cow and golden-goose Penfolds.

👉 What happened: In 2023, Treasury acquired the US wine group Daou Vineyards for $1.6 billion. In fact, nearly 75% of Treasury Wine’s profits come from its premium wine portfolio, including its US winemakers. But now, Treasury’s key distributor in California, the biggest wine state in the US, is pulling out completely.

👉 What else: Next minute, Treasury Wine Estates downgraded its FY2025 earnings forecast by $10 million. So now, Treasury is scrambling to find a new “route to market” to distribute in the US… which is one of its key focuses.

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What's the key learning?

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💡In the world of US wine, having great product isn’t enough… because you need someone to actually sell it. This is known as the "route to market". And it’s critical to getting your product into customers’ hands in the US.

💡The US has a pretty unique three-tier alcohol system that was started after Prohibition ended in 1933. Under this system, alcohol producers (like Treasury Wine Estates) can’t sell directly to retailers. Instead, they need to go through a wholesaler or distributor, who then sells to stores, bars and restaurants.

💡When a key distributor pulls out of a market, it creates a huge operational and revenue risk. In fact, that single distributor accounted for 25% of Treasury’s US sales...and 10% of its global sales. So Treasury needs to find a new route to market quick-smart to arrest the distribution gap.