ID :
15312
Fri, 08/08/2008 - 12:12
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Shortlink :
https://oananews.org//node/15312
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Constellation Brands to cut 350 jobs
AAP - US-based alcoholic drinks maker Constellation Brands Inc will cut 350 jobs from its Australian workforce in a restructure of its Australian operations expected to cost $140 million.
Constellation will sell vineyards and wine production facilities in Australia, and reduce the number of products within various Australian brands to improve efficiency and cut debt.
The move follows a strategic review of the Constellation Wines Australia business, formerly known as Hardy Wine Co, which Constellation acquired for $1.9 billion in January 2003.
Constellation undertook the review given changing market conditions, which included the stronger Australian dollar, duty increases in the United Kingdom, wine oversupply, drought-related cost increases, increasing competition, and consumer demand for higher-quality wine.
"As a result of implementing these changes, Constellation Wines Australia will be restructuring its workforce," Constellation Wines Australia president John Grant said.
"Approximately 350 positions will be impacted by this restructure, and we will provide assistance for all affected employees."
Mr Grant said the company was responding to the difficult global environment by taking steps that would benefit the company over the long term and 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," he 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."
Constellation will sell three of 10 wine production facilities in Australia - at Padthaway and Clare Valley in South Australia and Mount Barker in Western Australia.
It will also offload 23 vineyards at Great Southern in WA; Clare, McLaren Vale and Limestone Coast in SA; and Sunraysia in Victoria.
Bottling operations at Swan valley in WA will be relocated to Reynella in SA and Reynella operational time will be cut from seven days per week to five days.
The company will also streamline its portfolio of Australian wine labels, cutting the number of stock-keeping units by more than 30 per cent. No brands will be dumped.
Constellation's Australian brands include Banrock Station, Hardys, Houghton, Leasingham, Moondah Brook, Renmano, Stanley and Yarra Burn.
Constellation Brands chief financial officer Bob Ryder said less profitable products would be eliminated, other brands strengthened and prices lifted to boost profits.
He said proceeds from asset sales were projected to exceed the cash cost of the restructuring by more than $50 million.
The company expects to incur once-off cash costs of about $45 million and non-cash costs of about $95 million.
Constellation securities trading on the Australian stock exchange fell 12 cents to $2.25.
Constellation will sell vineyards and wine production facilities in Australia, and reduce the number of products within various Australian brands to improve efficiency and cut debt.
The move follows a strategic review of the Constellation Wines Australia business, formerly known as Hardy Wine Co, which Constellation acquired for $1.9 billion in January 2003.
Constellation undertook the review given changing market conditions, which included the stronger Australian dollar, duty increases in the United Kingdom, wine oversupply, drought-related cost increases, increasing competition, and consumer demand for higher-quality wine.
"As a result of implementing these changes, Constellation Wines Australia will be restructuring its workforce," Constellation Wines Australia president John Grant said.
"Approximately 350 positions will be impacted by this restructure, and we will provide assistance for all affected employees."
Mr Grant said the company was responding to the difficult global environment by taking steps that would benefit the company over the long term and 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," he 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."
Constellation will sell three of 10 wine production facilities in Australia - at Padthaway and Clare Valley in South Australia and Mount Barker in Western Australia.
It will also offload 23 vineyards at Great Southern in WA; Clare, McLaren Vale and Limestone Coast in SA; and Sunraysia in Victoria.
Bottling operations at Swan valley in WA will be relocated to Reynella in SA and Reynella operational time will be cut from seven days per week to five days.
The company will also streamline its portfolio of Australian wine labels, cutting the number of stock-keeping units by more than 30 per cent. No brands will be dumped.
Constellation's Australian brands include Banrock Station, Hardys, Houghton, Leasingham, Moondah Brook, Renmano, Stanley and Yarra Burn.
Constellation Brands chief financial officer Bob Ryder said less profitable products would be eliminated, other brands strengthened and prices lifted to boost profits.
He said proceeds from asset sales were projected to exceed the cash cost of the restructuring by more than $50 million.
The company expects to incur once-off cash costs of about $45 million and non-cash costs of about $95 million.
Constellation securities trading on the Australian stock exchange fell 12 cents to $2.25.
