Penfolds owner Treasury Wine Estates is on a mission to lead a push into no and low-alcohol (NOLO) varieties to tap into health-conscious drinkers, amid industry-wide efforts to appeal to a new generation of drinkers.
The company’s packaging and production facility in Nuriootpa is front and centre in that strategy, as the home of a
$15m facility dedicated to NOLO wine production for brands including Squealing Pig and Pepperjack.
Treasury has also partnered with Dan Murphy’s and BWS owner Endeavour Group on the launch of a new Sorbet brand, which blends traditional varieties like Prosecco, Rosé, Sauvignon Blanc and Shiraz with fruit and berry flavours such as passionfruit, mango and lemon.
It follows the release of a new range of Squealini wine spritzes earlier this year.
The company’s chief supply and sustainability officer Kerrin Petty says it’s that kind of innovation and investment in new products that will be key to navigating the current challenges facing the industry.
Kerrin Petty, who hails from Kimba at the top of the Eyre Peninsula, is a Treasury lifer, joining what was then Southcorp as a graduate in 2004. Picture: Supplied
“We’ve got a real opportunity and focus in this environment, and when you pick up on the low and no category, that’s us adjusting to what we need to do to retain our consumers and make sure we have an offering that is appealing to new consumers,” he said.
“We’ve gone all in. It’s a very strong belief that the category is here to stay, and the job for us is to make the best low and no alcohol wine to get consumers on board with wine.
“If we stay the same and do nothing different, I think volumes will fall away - but we’ve chosen to really tackle the challenges head on, and do things like introducing new flavours, new branding, no and low, premiumisation as well, because that still has a lot of strength. So we’re doing those sorts of things to make sure we’re still ahead of the game.
“The best thing we can do is really consolidate as an industry, focus on why it’s important to do things differently, and don’t just sit on your hands and expect things to go back to the way they were, because I think the change is enduring - we’ve just got to react and fight for our space with our consumers.”
Mr Petty, who hails from Kimba at the top of the Eyre Peninsula, is a Treasury lifer, joining what was then Southcorp as a graduate in 2004.
Treasury Wine Estates solar installation at Barossa Valley winery. Picture: Supplied
He’s worked his way up the ladder via vineyard, supply and operational roles, before taking up his current position on his return from a brief stint in the US in 2020.
Responsible for all vineyards and production facilities across Australia, New Zealand, China and Europe, and sustainability across the entire portfolio, he is Treasury’s most senior executive based in Adelaide.
Another South Australian, outgoing Lion chief executive Sam Fischer, will take the reins as chief executive of the Melbourne-headquartered Treasury next month, taking over from Tim Ford who departs after five years in the role.
Treasury’s push into the NOLO category comes as local winemakers and growers desperately search for new markets amid a decline in red wine consumption globally.
To support growers, a Senate inquiry into the current winegrape purchasing regime – which Mr Petty fronted late last year – and a separate review led by former Trade Minister Dr Craig Emerson both recommended that a mandatory code of conduct be introduced, including fair and transparent payment terms, earlier indicative pricing and a binding dispute resolution process.
Mr Petty said Treasury was generally supportive of Dr Emerson’s recommendations.
“The findings of the Emerson report, they’re largely practical,” he said.
“We just need to be super careful that industry is consulted on the way through ... because there’s different ways it affects different groups.
“But our participation signals the way we operate and I think anything that gives some surety to our growers and others growers is only a good thing.”
The addition of the NOLO production facility earlier this year comes 20 years after the Barossa Packaging Centre first opened in Nuriootpa.
It’s become the largest premium wine bottling facility in the Southern Hemisphere, and remains the global production engine room for Treasury, producing more than 96 per cent of its premium Australian wines.
Led by its flagship Penfolds brand, Treasury’s premiumisation push has been helped by last year’s return of the Chinese market following three years of tariffs on Australian wine.
The Penfolds division’s earnings
rose 13 per cent to $477m in the year to June, driven by strong growth in its Bin and Icon shipments to China. Penfolds contributes more than half of Treasury’s total earnings.
Earlier this year Treasury abandoned plans to sell off some of its lower-priced brands, including Wolf Blass, Lindemans, Yellowglen and Blossom Hill, after failing to find a buyer at the right price.
Mr Petty said the company was now “locking in” around those brands.
“They’re our brands, we love them, they’ve got a lot of history, so it’s about making sure they stand for something, making sure they’ve got the right support around them.”