Treasury Wine mothballs Karadoc winery as sales of low-cost wines fall
Treasury Wine Estates will shutter its Victorian commercial winegrowing operation, Karadoc, after five decades in operation, as a decline in consumption and rising costs weigh on the business.
Karadoc, about 25 kilometres south of Mildura, was one of four major production facilities operated by Southcorp, the producer of Penfolds, which was acquired by Foster’s Group in 2005 and later spun out as Treasury Wine.
Wine production will be moved in part to Treasury Wine’s Barossa site. Bloomberg
It has felt the impact of cost-cutting previously. In 2015, Treasury Wine closed Karadoc’s packaging and warehousing operations, but kept the winery operating, focused entirely on lower-end commercial production for brands such as Wolf Blass and Yellowglen.
On Wednesday, the company said it would focus on growing its luxury and premium wine portfolios and reduce its exposure to cheaper wine.
Treasury Wine chief supply officer Kerrin Petty said closing the Karadoc site was “a last resort after we’ve looked at all other possible options”.
“The wine industry is seeing consumers shift away from commercial wine,” he said, referring to wine sold at under $10 per bottle. “Over the coming years, we expect commercial volumes at Karadoc to continue to decline and volumes to be at around 60 per cent of the capacity that the site is built to process. Given 70 per cent of costs at Karadoc are fixed, processing less volume means the cost of running the site is substantially higher.”
Karadoc – which opened in 1973 – will close next year with 60 staff to lose their jobs. It also produces the 19 Crimes label, which Treasury Wine sells in the United States in partnership with Snoop Dogg and Martha Stewart.
In May, Treasury Wine chief executive Tim Ford
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