The five places where strategy meets the shelf

Australia has grown more warm-climate red grapes than the world will buy at a profitable price for most of this decade, and inland growers and wineries have carried the worst of it. For a mid-sized company the strategic question is not how to gain share in commercial wine but whether to be in it at all. I built Tarrowin's portfolio review on contribution per case after the capital each tier will need over five years, rather than on revenue or volume. That test showed the Riverland business, more than half our cases in FY2023, earning A$6 million of EBITDA on A$176 million of revenue while needing A$38 million of investment. The sale in February 2024 carried a A$19 million loss and left A$9 million of central costs behind, which took eighteen months to remove. Every portfolio paper I now write includes a plan for stranded costs and for the suppliers and staff affected, because those were the parts of the first sale that moved most slowly.

Two liquor chains owned by Australia's largest supermarket groups buy 58 per cent of what we sell in Australia and New Zealand. Each year they run range reviews, set promotional calendars, ask suppliers to fund a growing list of activities and sell more wine under labels they control. My task is to make sure our commercial team negotiates knowing which listings we would accept losing. I keep a shelf-economics model for each of our 140 domestic wines: rate of sale by store cluster, the retailer's margin per facing, our trade cost per case and the share of each wine's buyers who also buy our other wines. It shows which listings the retailer values more than we do and which we value more than it does. We document every request for funding and the reason we accepted or declined it, so that each arrangement can be explained to our board and, if the competition regulator ever asks, to it as well.

Exports provide 46 per cent of our revenue, and over six years trade policy has changed our economics more than any vintage. One Asian market applied duties that made our bottled wine uncompetitive from late 2020 until they were removed in early 2024. The United Kingdom moved to taxing wine by alcohol strength in 2023, which has raised the duty on our fuller-bodied reds relative to lighter styles. New US import tariffs in 2025 changed the arithmetic of our American importer agreements. I do not try to predict these events. I try to make sure none of them can do the damage the 2020 duties did. Since 2024 the board has held a limit that no single export market may exceed 20 per cent of export revenue, and I report against it twice a year. I also plan the allocation of our scarcest Barossa and Coonawarra wines market by market, because allocation sets price more reliably than any list price we publish.

We spend about A$46 million a year on trade investment with our domestic retail customers: temporary price reductions, catalogue features, display fees and, since late 2024, paid placements on the retailers' own advertising networks. Those networks sell suppliers access to shoppers through loyalty-member offers, sponsored search positions in their apps, website banners and screens in larger stores, and they report results from the retailer's own data. I treat the money as trade spend rather than brand advertising, so it has to show incremental gross profit against a control group instead of the attributed sales a retailer's report counts. In 2025 my team designed matched-store and held-out-member tests for five formats, with our finance team fixing the measures before the first campaign. Two formats beat our average price promotion and three fell well short. We moved A$7.5 million into the two that worked and reduced the depth of our discounting to pay for them.

Our direct business is the only part of Tarrowin in which we own the customer relationship. In FY2026 it earned A$44 million, 16 per cent of domestic revenue, at roughly twice the gross margin per bottle of our retail sales. When I became chief strategy officer we ran ten cellar doors, several in small towns on routes that visitors had largely abandoned. We closed four between 2020 and 2023, sold two of the buildings and put the money into our three busiest sites and our wine club, which grew from 38,000 members in 2019 to 61,000 in 2026. The closures upset two local councils and some long-serving staff, and one town lost its only tasting room. I still think the decision was right. A cellar door is a shop, and a shop has to earn its rent and its staff whatever it means to a region. We judge each site on members recruited, revenue per visitor and the cost of each visit, and we review the network every two years.