Treasury Wine Estates has resolved its dispute with US distributor RNDC following RNDC’s exit from California, with a settlement impacting cash flow but supporting a positive earnings outlook for the first half of 2026.
- Settlement reached with RNDC over California market exit
- TWE to repurchase inventory with net cash outflow of ~US$65 million in 2H26
- Continued partnership with RNDC in other US markets
- 1H26 EBITS guidance raised to approximately $236 million
- RNDC restructuring includes divestment to Reyes Beverage Group
Settlement Resolves California Market Disruption
Treasury Wine Estates (ASX – TWE) has announced a settlement with Republic National Distributing Company (RNDC) following RNDC’s unexpected closure of its California operations in September 2025. This move had previously cast uncertainty over TWE’s US distribution strategy and inventory management in a key market.
Under the terms of the agreement, TWE will repurchase inventory from RNDC’s California stock at original sale value, adjusted by a confidential settlement amount that compensates for the disruption. This repurchase includes inventory from both the Treasury Americas and Treasury Collective portfolios.
Financial Impact and Ongoing US Market Strategy
The net cash outflow related to this settlement is expected to be approximately US$65 million in the second half of 2026. This figure factors in proceeds from the sale of some inventory to other customers and the confidential settlement sum. While significant, this outflow is a measured response to stabilise TWE’s position in the US market.
Despite the setback in California, TWE maintains a strong relationship with RNDC in other US states, where distribution continues to grow. Notably, Treasury Americas depletions in RNDC-distributed states increased by 2.7% in the first half of 2026, signalling resilience in these markets.
RNDC itself is undergoing a strategic restructuring, including divesting several markets to Reyes Beverage Group and establishing new financing arrangements. These changes are expected to reduce RNDC’s share of Treasury Americas’ net sales revenue to less than 20%, reflecting a shift in the US distribution landscape.
Earnings Outlook and Market Confidence
Looking ahead, TWE has raised its earnings before interest, tax, and significant items (EBITS) guidance for the first half of 2026 to approximately $236 million, slightly above the previous range of $225-235 million. This upgrade suggests confidence in the company’s ability to navigate the distribution challenges and capitalise on growth opportunities elsewhere.
CEO Sam Fischer emphasised the importance of the RNDC partnership beyond California, describing RNDC as a “committed and high performing partner” in other US markets. The company plans to provide further details on its interim results on 16 February 2026, which will offer more clarity on the financial and operational implications of the settlement.
Bottom Line?
TWE’s settlement with RNDC clears a major hurdle, but the evolving US distribution landscape warrants close investor attention.
Questions in the middle?
- What are the long-term implications of RNDC’s market divestments for TWE’s US distribution?
- How will the confidential settlement amount affect TWE’s overall profitability beyond 2H26?
- Can TWE sustain growth in other US markets amid distributor restructuring?