Endeavour Group Ltd. (EDVGF, EDV.AX), Australia’s retail drinks and hospitality company, announced Wednesday it will restructure its Pinnacle Drinks business to prioritize best-selling wine brands and reduce costs.
The restructuring will see the company cut its own grape production by more than 80%, a significant shift in how it sources its core product.
Following the changes, approximately 99% of the company’s wine and grape supply is expected to come from outside suppliers.
As part of the overhaul, Endeavour Group will reduce its winery operations from seven sites down to three.
The company will retain key brands under the restructured business, including Cape Mentelle, Isabel Estate and Dorrien Estate.
One major packaging facility in the Barossa Valley will be kept, while the McLaren Vale bottling site is set to close later this year.
The company also announced plans to sell the Oakridge wine business located in the Yarra Valley.
Vineyards and properties linked to Chapel Hill, Riddoch Coonawarra and Krondorf Barossa will be sold, though the company intends to retain those brand names.
Chapel Hill operations are scheduled to shut down at the end of June, and the company is also reviewing the future of Josef Chromy as it does not plan to renew its lease.
Chief Executive Officer Jayne Hrdlicka said the changes will help the company focus more on customer demand and improve profits.
Shares of Endeavour Group were trading 5.84% lower at AUD 2.9000 on the Australian Securities Exchange following the announcement.
