Treasury Wine settles RNDC dispute - repurchases California stock, raises EBIT outlook

Treasury Wine Estates has reached a settlement with U.S. distributor Republic National Distributing Company over RNDC’s closure of its California operations, agreeing to repurchase portfolio inventory and raising its first-half earnings outlook. The Melbourne-based winemaker said it will repurchase Treasury Americas and Treasury Collective portfolio inventory held by RNDC in California for its original sale value, net of a confidential settlement amount that compensates the firm for the impact of the closure.

The agreement carries a material cash consequence. Treasury Wine expects to report a net cash outflow of USD 65 million relating to the settlement, a figure that has been converted in some reports to roughly A$91.7 million. The company simultaneously lifted its first-half EBIT guidance to around A$236 million, up from prior guidance of A$225–A$235 million issued in December. Using an exchange rate of $1 = 1.4102 Australian dollars, that A$236 million equates to about US$167.35 million. The new forecast remains well below the A$391.4 million reported in the prior corresponding period.

The market responded positively to the resolution and guidance bump. Shares rose intraday as much as 8.12% to A$5.590, a move described as the biggest intraday percentage gain since Sept. 27, 2024. A separate trading snapshot recorded a gain of about 6.1% to A$5.49 at 11:55am AEDT. One outlet noted the stock is down roughly 50% over the past 12 months, underscoring the rally as a rebound from depressed levels.

The settlement settles the fallout from RNDC’s planned exit and closure of its California business. RNDC announced a planned exit from California in June last year and subsequently closed operations in September, prompting the inventory dispute. RNDC will remain a distribution partner for Treasury Wine across the other 24 U.S. states, and following RNDC’s planned divestment of several markets to Reyes Beverage Group, RNDC distribution is expected to represent less than 20% of Treasury Americas’ net sales revenue.

Treasury Wine’s chief executive, Sam Fischer, said the California exit had a major operational effect. “RNDC’s California exit had significantly affected its first‑half performance,” he said. In a fuller statement he added: “Although RNDC's decision to exit the Californian market had a significant impact on our performance in 1H26, we are pleased to have reached this resolution with RNDC, who remain a committed and high performing partner for [Treasury Wine] across a number of other US markets.”

Operationally, the company reported that depletions for its Americas products distributed by RNDC grew 2.7% in the half-year, providing some offset to the disruption. Treasury Wine also reiterated plans announced in December to reduce distributor inventory levels outside California over the next two years as it seeks healthier channel inventory dynamics.

Not all details are public. The confidential settlement amount deducted from the repurchase price has not been disclosed, and the precise timing and accounting treatment of the USD 65 million cash outflow were not specified. Treasury Wine cited broader headwinds in China, where shifting alcohol consumption patterns are slowing depletion of flagship Penfolds stock, suggesting the company will need to navigate regional softness even as it repairs U.S. distribution interruptions.