07/08/2008 - 11:39

Houghton cutbacks, Goundrey asset sale

07/08/2008 - 11:39

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Cutbacks and asset sell-offs at the Houghton and Goundrey wine operations have been announced by US-based owner Constellation Brands as part of major changes at its Australian operations.

Cutbacks and asset sell-offs at the Houghton and Goundrey wine operations have been announced by US-based owner Constellation Brands as part of major changes at its Australian operations.

Bottling operations at Houghton, which has been in the winemaking business since 1836, will be closed at its Swan Valley production facility.

Houghton has the capacity to crush more than 13,000 tonnes of grapes at its WA operations but will now truck its wine in containers to be packaged in Reynella in South Australia.

Constellation will sell-off the Goundrey winery and vineyards in Mount Barker but says it plans to retain the brand. It proposes to buy the fruit from new owners and continue use the facilities, which have a capacity of about 7,500 tonnes, to make its wine on a contract basis.

Constellation, WA's biggest wine maker, said as many as 350 staff would be impacted across Australia, but expected many of these to retain employment with assets that were being sold.

A spokesperson told WA Business News it would be irresponsible for the company not to respond to challenges it faced in the industry, including drought affected grape costs, the strong currency and extra taxes in the key UK market.

 

 

Below is the full announcement:

Constellation Wines Australia today announced a major restructure of its operations, product offering and workforce following a comprehensive review in response to a number of challenges facing the Australian wine industry.

CWAU said challenges confronting the sector included the strengthening Australian dollar, ongoing increases in duties in the United Kingdom - its major export market, wine oversupply situation resulting from record high 2004, 2005 and 2006 vintages, followed by drought related production cost increases in 2008, specifically involving the cost of grapes.

CWAU President John Grant said that the company was responding to the difficult global environment by taking steps designed to benefit the company over the long term and, by so doing, help strengthen Australia's wine sector.

"We have already implemented changes across the business over the past 12 months to reposition ourselves, with a renewed focus on high quality, higher value wines to suit global consumer demands", Mr Grant said.

"This has included reinforcing the strength of our key wine brands through investing in brand building, strengthening our sales team, and reducing our production footprint by consolidating production in the Riverland and Sunraysia regions."

"The review has identified the need to streamline our company, thereby underpinning our future."

Mr Grant said CWAU would bring greater focus to its business by reducing its product range and production footprint, which will deliver greater quality and efficiency.

He said changes to the business included the sale of its winemaking facilities in Clare (SA), Padthaway (SA) and Mount Barker (WA), streamlining its product portfolio and adjusting fruit sourcing requirements accordingly, relocation of Swan Valley (WA) bottling operations to Reynella (SA) and a reduction in the number of bottling shifts at Reynella.

"We intend retaining the Leasingham, Stonehaven and Goundrey wine brands and will continue to source fruit from these regions and vineyards as required."

"As a result of implementing these changes, CWAU will be restructuring its workforce," Mr Grant said. "Approximately 350 positions will be impacted by this restructure and we will provide assistance for all affected employees."

Mr Grant said CWAU was committed to the long term sustainability of the Australian wine industry, and was confident the actions being implemented would assist the company in its efforts to achieve ongoing success as well as strengthen the overall sector.

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