Treasury Wine Estates Limited ($TWE)

[Presentation] Very good. Good morning, everyone, and thanks for joining us today. We appreciate you taking the time to hear more about what is happening the Treasury Wine Estates. Today is providing clarity on where we're going and importantly, about our plans to get there. Joining us today is our CEO, Sam Fischer, and members of our executive leadership team. Tom King, our Chief Commercial Officer; Kristy Keyte, our Chief Marketing and Innovation Officer; Jack Wu, our Managing Director of Greater China; Ben Dollard, President of Treasury Americas; Angus Lilley, Managing Director, ANZ and Europe; our Chief Supply and Sustainability Officer, Kerrin Petty; and Justin Pipito, our Interim Chief Financial Officer. In terms of our agenda for today, Sam will begin with an overarching view of the opportunity we see in the wine category and for TWE and our plans to make it happen. Tom will take us through how we're transforming our operating model and strengthening execution and accountability. We'll then from Kristy, who will talk about how we're building a more focused brand portfolio and investing world-class marketing and innovation before we open up for Q&A. After morning tea, we'll hear from our regional leaders, Jack, Ben and Angus, who will provide insight into their regional plans and take your questions before we break for lunch. Following lunch, Kerrin will outline our supply chain transformation strategy before Justin shares our financial outlook. We'll then follow that with a final Q&A session, and Sam will wrap things up. I'll also draw your attention to the interactive displays we have around the room and in the foyer. You no doubt would have seen those as you came in, which really bring to life our brands and the innovation and capability that will shape our future. Over lunch, we've got a selection of wines for you to enjoy. And we're also fortunate enough to have some of our brand ambassadors with us today. In addition to our senior innovation we make a clear dry who will be hosting a no low alcohol tasting immersion, so you'll enjoy that. So we encourage you to take the opportunity to connect with them during the break and learn firsthand about our brands. We do hope you find today valuable. With that, I'll hand over to Sam.

Thanks, Bijan, and good morning, everyone. I, too, would like to thank everyone for joining us today to learn more about the future of Treasury Wine Estates. As I've reflected on the opportunity ahead for I found myself thinking about certain experiences that have shaped my perspective on the wine category and the long-term potential of this company. This was first growing up in the Barossa Valley, where the power and potential of Penfolds was unmistakable, a benchmark for the region, the country and the emerging luxury wines of the new world. The genius of Grange was blending, drawing from the very best fruit across regions and vineyards in pursuit of unmatched quality and the willingness to challenge old world convention. That early conviction in the potential of Penfolds has never left me. It was further intensified by my time living in Asia. I witnessed firsthand the way Chinese consumers build lasting connections with brands, deep considered generational connections Penfolds occupies a China that very few global brands ever achieve. And more recently, my experience of spending time across our business has enforced the strength of the foundations we already have at TWE, extraordinary assets and brands, winemaking capabilities and leading market positions. But unlocking the full potential of those strengths requires clarity, focus disciplined execution and the confidence to make bold choices about where to compete and where to invest. That's exactly what we're setting out to achieve with TWE Ascent our program to progressively transform TWE. As the sentence says, we see a bright future for TWE as a more focused market-centered simpler and financially strong wine company. Every word in that sentence has been chosen very deliberately and is anchored in our 4 assent pillars. Starting with focusing where we will win. Over time, TWE has amassed a broad and diverse brand portfolio. We will now take decisive action to migrate our focus more fully to the brands that represent our future, prioritizing our highest potential brands within the most attractive markets and segments and where we have the strongest right to win. Second is transforming how we operate. simplifying and reshaping TWE around the needs of consumers and customers, while step-changing brand building and in-market execution. Our third Ascent pillar is shaping a future-fit supply chain, transforming our supply model to be aligned to a smaller and more focused portfolio positioned to enable the growth of our treasured brands. And finally, our fourth pillar, delivering consistent high-quality financial returns. Ascent is designed to deliver sustainable high-quality earnings growth over the medium to long term with improved margins, return on capital and stronger cash flow. These 4 areas will underpin the focus of today's presentation, which I'll now share more detail on. Starting with focusing on where we will win. Our conviction in TWE's bright future is grounded in the belief that wine will continue to play a meaningful role in the lives of consumers. Wine has played an enduring role in society for thousands of years. People all over the world enjoy wine as they celebrate, connect and relax. And while we believe that these underlying occasions will endure, we do need to acknowledge that wine consumption is evolving. Drinkers needs are changing competition for share of occasion is increasing and consumer expectations of the brand stay engaged with from quality and authenticity to innovation and experiences continue to intensify. We continue to see highly attractive growth opportunities within the category. Luxury wine remains highly attractive, underpinned by the premiumization trend as people drink less but better. And importantly, luxury already represents more than half of TWE's NSR today. At the same time, lighter and refreshing style else continue to gain relevance and share within the category. Today, they represent approximately 1/4 of TWE's giving us strong exposure to that trend. And finally, while our exposure today remains small at less than 1% of NSR. The better for you and moderation trends now present a very meaningful long-term growth platform where we are well positioned to lead. These trends have strengthened our focus on the category and consumer segments that are most attractive and where we have a genuine right to win. As a result, our future state portfolio will be centered around 3 clear growth pillars, as you can see on this slide. Strengthening our red wine leadership, our luxury red wine leadership in key markets, building a stronger position in luxury white wine and growing our position in modern refreshment. Luxury red wine will continue to be TWE's main growth engine but we will expand our focus to the future growth opportunities across pillars 2 and 3. Together, this balanced 3-tier portfolio strategy provides greater clarity around where we will invest, the role each brand plays and how we will innovate and the capability is, we will prioritize building. We have taken a future back view of the category and our priority markets to determine the most compelling long-term portfolio opportunities for TWE. What is clear is that the opportunities to win are increasingly concentrated within specific segments, styles and geographies. In China and across Asia, we continue to see strong long-term opportunities in luxury red wine with emerging demand for luxury white wine. In the U.S., the opportunity is broader and more diversified, spanning luxury cabinet, premium white varietals and emerging moderation occasions. Australia and the U.K. continue to show strong momentum in lighter and more refreshing styles. Importantly, these trends align directly to the areas where we already have strong brands proven capabilities and the greatest right to win. So every brand within the future state portfolio is directly aligned to 1 of our 3 strategic growth pillars, starting with luxury red wine. Here, TWE has some of the most heralded brands in the world, led by Penfolds, DAOU wins and a ag leap winery. We have built a compelling competitive advantage across key markets, most notably China, Australia and the U.S. Importantly, our advantage extends to sourcing and winemaking capabilities that are difficult to replicate. Our luxury white wine portfolio includes Frank family and DAOU Sharde, with the opportunity for Penfolds to grow its luxury white offerings through Yatana and BIN311. Through these leading brands, we are very well positioned to grow our luxury white wine portfolio. Our third growth pillar, modern refreshment, is where we offer lighter, flavor-led wine experiences that support moderation, unlock new opportunities and broaden the relevance of our brands. We expect lighter refreshment styles to increasingly gain share. with growth being full by younger consumers seeking more refreshing and occasion-led wine experiences. Importantly, TWE already has credible established brands with strong relevance in these lighter styles, in particular, through mature and Squealing peak. Our continued investment in proprietary processing capability, sensory science, and our world-class innovation in engine positions us strongly to lead within the better-for-you segment as well. So in combination, our future state portfolio will be built around 10 priority brands that represent our best opportunity in the most attractive market segments. As you can see on this slide, at the center of our portfolio will be our power brands: Penfolds, DAOU and Matua. These 3 brands represent only 25% of volumes, but 72% of gross profit, highlighting their long-term strategic value. Our power brands will be complemented by a small group of regional heroes. Frank Family Billions, Bali Vineyards tag sleep winery, Pepperjack, Squealing Pig, Wynns and Coldstream Hills. These brands will play important roles within specific markets, channels or consumer occasions. Today, they represent represent 10% of volume and 10% of gross profit, while allowing us to get to maintain a targeted presence in key markets. A key principle underpinning our future state portfolio is the greater clarity around the role of each brand. As mentioned, our power brands will represent the largest growth opportunities. These are scalable brands with the ability to win across multiple markets. Collectively, they will receive disproportionate investment and organizational focus to support our growth ambition. Alongside this, our regional heroes will continue to drive local relevance as highly acclaimed brands with strong heritage, loyal consumer followings and established market positions in their respective regions. They will continue to play a critical role in strengthening customer leverage and ensuring appropriate portfolio breadth within local markets. Together, this creates a more focused and disciplined portfolio architecture, balancing global scale and growth ambitions with strong local market relevance while enabling sharper investment and resource allocation decisions. And you can see that in more detail here. We will increase total investment -- we will increase total investment, but we will deploy our A&P spend in a more targeted and disciplined way. From F28, we expect group A&P investment to increase to approximate nearly 10% of net sales revenue, up from around 8.5% in fiscal year '26, bringing us more in line with global luxury benchmark. Importantly, investment levels will be aligned to each brand's role and growth ambition rather than being distributed broadly across the portfolio. Power brand will receive disproportionate investment, while regional heroes will also see increased investment. Investment across nonpriority brands progressively reduce over time as the portfolio becomes more focused. This creates a much clear link between capital allocation, portfolio strategy and long-term value creation. We expect power brands and regional heroes to represent 90% of net sales revenue in the next 5 years, up from 68% today. Today, we operate with more than 70 brands across multiple markets and channels. In the future, we will operate less than 30 brands, a meaningful reduction. So there will be a significant transition that we will embark upon progressively over multiple years. As this transition occurs, the remaining nonpriority plans will be managed deliberately to meet customer commitments and to support appropriate production scale and operational efficiency. We have identified 4 pathways for nonpriority brands, depending on their role and relevance within the portfolio. The first are transition brands. where production and sales will be progressively reduced over time and investment levels appropriately rightsized as the portfolio becomes more focused. Managing operational scale and minimizing dis-synergies from reduced production volumes will be a key imperative throughout this process. The second group is tactical brands. These brands will continue to -- will continue to serve targeted roles within specific markets, channels or customer environments. Even with they are considered where they are not considered long-term growth priorities. Rawson's Retreat in China is an example here. The third category assists of brands or assets where ownership is no longer strategically aligned to the future direction of TWE and where divestment will unlock greater long-term value. The final category includes brands that will be retired in the near term, where there is limited strategic rationale or long-term economic value to retaining them. Having defined the future state portfolio, the second pillar of Ascent is transforming how we operate. To set that portfolio up for success in the marketplace, and to step change efficiency, execution and accountability. As previously announced from the first of October, we will transition to a regional operating model structured across 4 regions: the Americas, ANZ and Europe, Greater China and emerging markets. These regions reflect how we will drive growth and performance across the business. You will hear more from Tom and the team later today about how this model will operate in practice across these key markets. The model is designed to create clear accountability, enable faster decision-making, shape our portfolio around customers and consumers and unlock greater efficiencies by reducing duplication, streamlining processes and leveraging automation and technology. We expect $100 million per annum in cost reduction to be fully realized by F '29, with benefits commencing from F27. While we are implementing the right operating model, we also need to create a culture where people are accountable for high performance. We have strong foundations, passionate people, deep expertise strong collaboration and an entrepreneurial mindset. We are now embedding a stronger performance edge with clearer prioritization, greater accountability and stronger linkage between performance and reward. We are also materially increasing performance visibility through a more data-led management and real-time tracking across key metrics such as inventory, shipments and depletions. This is enabling faster intervention, stronger decision-making and tighter execution control. Ultimately, we are building a high-performance culture where top performance is recognized and rewarded, where accountability is clearer and executional discipline becomes a stronger competitive advantage for TWE. Turning now to our third Ascent pillar, shaping a future-fit supply chain. To unlock our future potential, we will fundamentally reshape our supply chain into a fit-for-purpose, agile and efficient model. Historically, elements of our supply chain have constrained portfolio choices and added complexity to the business. As part of Ascent, our intention is to reposition the supply chain as a clear enabler of our future portfolio ambitions. In Australia, we've already made significant progress over a number of years, creating a flexible and efficient production model. Now we apply many of those learnings and transformation principles into our U.S. operations. As we reshape our supply chain to match our future ambitions, we will be led by the design principles outlined on this slide. We will drive agility and efficiency, align capacity to long-term demand. simplify end-to-end, increased cost flexibility, protect flexible sourcing and luxury supply and improved capital efficiency through divestment of surplus vineyards and wineries. These initiatives will be phased progressively and carefully aligned to the portfolio transition to minimize dis-synergies while supporting continuity across the business as the transformation progresses. Turning now to our fourth Ascent pillar, delivering consistent high-quality financial returns. Ultimately, all of the initiatives I've discussed this morning are designed to materially strengthen TWE's financial position over time. We are committed to creating a structurally stronger business and the attractive long-term returns you deserve for supporting us on the journey. Before diving into the detail, it's important to reflect on the significant progress that we have already made in F26. Clearly, we have more work ahead of us. but I'm encouraged by the momentum we are building to strengthen the business and improve execution. As you can see on this slide, we've regained growth momentum for priority brands in key markets. with another month of pleasing depletions to report in China and the U.S. This builds on the positive third quarter momentum we shared in April. We have also commenced action to improve channel and inventory health, accelerated our Ascent transformation agenda. We've elevated a performance-led culture across and strengthened our balance sheet. At the same time, we've decided to pursue a strategic and operational review in the Americas, focused on improving shareholder returns. I'd like to take a moment to touch on this. In recent months, we have made good progress on a number of our key priorities in the Americas region. These include returning our luxury portfolio depletions to growth through strengthened execution and achieving a settlement with RDC in relation to their exit from California, taking control of our inventory in that market. Through Ascent, we have also completed a detailed assessment of the demand outlook in the region. And while we continue to see positive market conditions and an opportunity to drive above-category depletions growth for our portfolio. Our Californian supply chain will require significant changes to correct what is a structural misalignment between capacity and our future state portfolio needs. We have already come hence that work ahead of 2 of the 2026 vintage by reducing grower intake and following a number of vineyards. Additionally, elevated levels of luxury wine from recent vintages which are currently held on our balance sheet will be sold through over a longer term than previously expected. In combination, these elements are expected to drive higher per unit production costs for the Americas portfolio and, therefore, impact our margin profile in the region over the medium term. We have decided to commence a broader strategic review of the Americas business. Currently, we are not generating an appropriate level of return for the capital that we have allocated in that business. and the focus of the review will be considered a range of options that ultimately deliver the best return for our shareholders. These options could include further refinement of our operating model, the acceleration of initiatives across the supply chain or the sale of selected brands or assets. Turning now to our near-term outlook. We expect F26 EBIT to be delivered in the range of $480 million to $490 million. For F27, we expect EBIT to be at least equivalent to F26 and as we continue to progress the rebalancing of customer inventory in China and the U.S. Penfold's inventory cover in China is expected to reduce by approximately 150,000 cases in F26, and we expect inventory rebalancing to be completed in F27. For Treasury Americas, inventory cover is expected to remain stable in F26, with rebalancing to be progressed in F27 and completed in F28. We expect leverage to peak at 2.9x in F26 and returned to target below 2x by the end of F28. Deleveraging will be driven by improved free cash flow proceeds from divestments and from F28 earnings improvement. Given the scale of the transformation, it's equally important to understand the financial profile we expect as Ascent progresses over time. Our top line will be focused on delivering ahead of category growth for our power brands and regional heroes, while we continue to manage declines in the nonpriority brands. This will result in managed declines in volume, particularly in the first few years. COGS per case will increase as production volumes reduce, however, will be partially mitigated through supply chain transformation initiatives. The $100 million per annum reduction in costs is driven primarily through the changes in operating model focused on simplification and reducing duplication. This will improve our cost of doing business. Importantly, as the portfolio premiumizes the operating model simplifies and supply chain initiatives are realized, we expect meaningful improvement in the quality of earnings and expansion in EBIT margin to a long-term target of 25% plus. At the same time, we expect to return -- at the same time, we expect return on capital to improve. We are under no illusion as to the importance of returning this metric to appropriate levels through elevated discipline in the way we allocate capital and through driving earnings growth. I want to emphasis -- I want to emphasize that this financial profile is inclusive of the supply chain cost impacts that I discussed earlier, which are working hard which we are working hard to mitigate and deliver benefits as soon as possible. Finally, we expect there to be one-off material item costs of between $220 million and $260 million which excludes any impacts associated with potential future divestiture monobrand and assets. So I trust that's provided a clear picture of the future TWE we are building, a business that is focusing where we will win, prioritizing highest potential brands within the most attractive markets and segments, with strengthened AMP investment to grow brand equity while transforming how we operate. We're simplifying and reshaping TWE around the needs of consumers and customers while step-changing brand building, execution and data-led performance management and building a more accountable culture. We're shaping a future-fit supply chain, transforming our supply model to align to a smaller, more focused portfolio and operating model objectives. And finally, as I've outlined, we will strengthen our financial position, focused on delivering sustainable, high-quality earnings growth over the medium to longer term. With that, I'll now hand over to Tom to take us deeper into how we're transforming how we operate. Thank you.

Thank you, Sam, and good morning, everyone. It's a pleasure to be here today in my new capacity as Chief Commercial Officer Officer at TWE, and I'm excited to share with you how we're going to transform the way that we operate at TWE. There are 5 core pillars that underpin this transformation. And over the next period, I'm going to take you through each of those pillars in turn. At its core, this transformation is about reshaping the organization around the needs of consumers and customers, while simplifying the operating model sharpening accountability and improving the speed and quality of decision-making across the business. The reason this matters now is simple. The environment we operate in is more dynamic than it was even a few years ago with much faster shift in consumer demand, a much tougher channel dynamics. In this environment, we need a model which enables better and quicker decisions, stronger execution and much clearer accountability. What we're doing isn't change for its own sake. It's about building an organization that is better equipped to compete, to move faster and to direct resources with greater discipline towards the opportunities that matter the most. There are 5 principal components to transforming how we operate. Firstly, we're reshaping our operating model to be regionally focused, with clearer accountability for market performance and faster decisions closer to the point of execution. Second, we're standardizing our approach to brand building, so that we can invest with greater discipline and conviction behind the brands with the greatest capacity to create value. Third, we're embedding commercial excellence more deeply across the organization, lifting execution discipline, strengthening customer engagement, and improving commercial judgment. Fourth, we'll be uplifting our adoption of digital, data and AI with key areas of work supporting all the Ascent priorities. And finally, will be embedding performance discipline throughout the organization with success measured through a set of disciplined metrics. These 5 components are designed to work together as one system. A simpler operating model on its own is not enough unless it is matched by stronger brand choices, better commercial execution, more more useful data and much clearer performance management. Equally, better tools or better metrics don't change outcomes unless accountability is clear and the operating rhythm is disciplined. This isn't a series of disconnected initiatives. It's an end-to-end shift in how we set direction, make decisions, execute in market and measure success. The first significant change is the move to a regional operating model. The principle is guiding the operating model design are clear, enabling flawless in-market execution centralization where it creates value, disciplined rightsizing of cost and capability and modernization of the way we work through data and technology. Under this model, each region will bring together the core commercial capabilities required to compete effectively across sales, marketing and commercial strategy, all supported by centralized supply, global marketing and corporate functions. In practical terms, this means the people closest to the market are better positioned to make timely decisions on pricing, channel choices, customer plans and execution priorities but all within a very clear enterprise framework. Under the new model, each region has a complete set of capabilities is around the table. This will increase speed, improve judgment and make accountability much clearer. The role of the enterprise is to set the guardrails, provide the tools and standards and ensure we're allocating resources to the highest value opportunities. The regional role is then to execute with pace and precision in market. In my new role, I'll have responsibility for creating and driving execution discipline across all our markets. with a focus on growing brands and share by beating the competition across all markets channels. The creation of this role reflects the importance of having stronger enterprise leadership across the commercial agenda, particularly in areas where consistency matters, such as execution standards, commercial capability, performance rhythms and the transfer of best practice across markets. The second component of our transformation is establishing a standardized TWE approach to brand building. led by our Chief Marketing and Innovation Officer, Kristy Keyte. Embedding a common marketing framework globally to ensure our in-region teams operate with greater consistency and discipline will be a key focus for Kristy. Standardization in this context doesn't mean every market does the same thing. It means we're clearer and more consistent on the role of each brand, how we evaluate investment choices and the frameworks we use to plan and measure effectiveness. Within that, regions will still tailor activation and execution to local consumers, channels and market dynamics. As Sam mentioned, will evolve the way we allocate investment across the portfolio with more targeted and increased A&P investment. That investment will follow the opportunities with the highest long-term value creation potential, with our power brands receiving the majority of the investment. Alongside this, we'll be increasing our investment behind innovation, future-proofing the portfolio and broadening the set of growth options available to us as a business. As you'll hear from Kristy shortly, the ambition is not only to increase brand investment but to improve its consistency, effectiveness and long-term return. The third component is embedding commercial excellence across the organization. This is all about simplifying and strengthening our execution and commercial capability. Commercial excellence can mean different things in different businesses. But for us, it starts with the fundamentals of execution and choice. It means stronger pricing discipline, better revenue growth management more effective customer and distributor planning, sharper negotiation capability and clearer decisions on where to focus our portfolio by market and channel. It also means being more disciplined in how we evaluate commercial investment, how we track execution against plans and how we quickly we intervene when performance is off track, ensure it's about lifting both the quality of our decisions and the consistency of our execution. Core execution discipline principles, including making decisions that protect the long-term health of our brands, strengthening accountability with our partners against agreed performance plans and using data more effectively to guide decision-making. For example, this means being more rigorous about where the promotional activity is truly creating value or simply driving short-term volume at the expense of long-term brand health. It also means having much clearer expectations with our customers and distributors on what success really looks like and a more disciplined approach to reviewing delivery against those plans. Over time, that will improve the quality of our customer partnerships and help ensure that commercial investment is genuinely translating into stronger and more sustainable performance. enhancing our commercial capabilities about raising the bar on organizational-wide capability across selling, negotiating and commercial judgment. That capability uplift isn't just about frontline selling. It also includes better use of insights and analytics, stronger financial in a commercial teams, much clearer understanding of category and channel economics and better coaching and development so that capability is built sustainably over time. One of the advantages of a more connected enterprise model is that it will make it easier to identify and scale best practice rather than relying on isolated pockets of excellence. Supporting these changes is a new global operating system. At the enterprise level, we will define the long-term strategic guardrails that shape where we play and how we win, including our choices across category, markets, brands and innovation. We'll also establish the rules, tools and standards that provide consistency in areas such as A&P allocation, pricing, product allocation and sales and marketing execution. The intent here is not greater centralization for its own sake. Rather, it is to create clarity on the strategic and commercial framework within which regions operate, enabling them to execute with greater confidence, pace and accountability. We believe this will improve alignment right across the group, reduce unnecessary complexity and strengthen the link between strategy, execution and performance. Digital data and AI adoption is a key enabler of this transformation to embed commercial excellence across our global business, we need better visibility, better tools and better information. Our objective is to create a single source of truth for all data reporting and scorecards, supported by globally consistent performance metrics and strict data governance. We'll also be investing in tools that enhance sales enablement and execution, including the automation of sales operations, better customer and distributor information and much more advanced forecasting tools. The practical value here is really significant, better forecast and will improve decision-making around supply, allocation and customer planning. Better customer and distributor information will allow our teams to identify issues earlier and target opportunities more effectively. Greater automation in sales operations will reduce the admin burden and give our teams more time to focus on customers and execution. Over time, stronger data and tech capability will also improve how we assess promotional return sharpen our understanding of consumer behavior and strengthen our digital and e-commerce effectiveness. Also Essential is enhancing how we measure our performance, and we'll apply greater discipline performance management across 4 dimensions: category performance, execution customer outcomes and financial delivery. These 4 dimensions are important because they force us to look at performance in a more round performance tells us whether our brands are competing effectively in the market. Execution tells us whether we're doing the basics consistently well. Customer outcomes tell us whether our partnerships are creating value in practice. And financial delivery tells us whether that activity is translating into the right economic result. Looking at these dimensions together, we'll improve the quality of our interventions because it helps us identify not just where performance is up or down, but why and what needs to change. And that includes executive oversight through the CEO and CFO. So the performance management capital allocation and strategic priorities remain tightly connected. In summary, this transformation will result in a faster, clearer and more effective TWE with better decisions, stronger execution in market, more disciplined investment and much greater consistency across the group. That's what will allow us to build a more scalable business and over time deliver stronger and more sustainable performance. I'll now hand over to Kristy Keyte to talk about how we're raising the bar on brand building at TWE.

Well, good morning, everyone. I'm Kristy Keyte, and it's wonderful to be with you here today. Talking about the elevation of brands at TWE. My last 5 years with the business has been as the CMO of Penfolds and in that time, I've witnessed firsthand the power of getting the fundamentals of brand building right, knowing the drivers, creating clarity around direction and delivering with discipline has resulted in a brand that has gone from strength to strength. And although Penfolds is unique in so many ways, the fundamentals that underpin success can be applied more broadly across the portfolio. and I'm thrilled to be a part of that journey. As you heard earlier, we are transitioning to a smaller, more focused portfolio of strong established brands. These brands are well aligned to the most attractive growth spaces in wine, positioned to meet evolving consumer and customer needs across our key markets. The opportunity now is about unlocking more value from these brands. by shifting to a much more disciplined brand building model, ensuring our brands are commercially connected into our markets and positioned to win. This is what underpins the step change in how we approach marketing at TWE. And it sets us up for a unified approach, which I'm going to walk you through next. The new operating model ensures that we are set up to build brand strength across our portfolio in a much more deliberate and consistent way than we have in the past. We would do this by standardizing our way of brand building across 3 core elements. First, we are embedding a clear and consistent marketing approach. This means a common and best practice method that will lead to clearer choices, sharper positioning and more disciplined execution. As a result, every power brand and regional hero will have a strong strategic spine, so we are not reinventing the wheel market by market. Second, we're using a dual innovation system to drive relevance and growth. future-proofing the portfolio, creating new demand and keeping our brands relevant as consumer occasions evolve. Third, as we increase our investment behind our brands, we will be more disciplined about how we invest using proven growth principles to maximize effectiveness. Together, these 3 levers create a more consistent and scalable brand building system focused on achieving better commercial outcomes. We will be clear in our choices stronger in execution and more focused in where and how we are placed with our investment. Penfolds is an excellent example of what these strategic marketing foundations look like in practice. It starts with a clear brand blueprint. It is the articulation of who we are, what we stand for and how we show up consistently in market. This complete clarity and understanding has given Penfolds a strong center of gravity, providing a clear reference point for decisions across markets, channels and touch points. From there, we apply a rigorous planning process. The point of planning is not simply to produce activity calendars. It is to ensure the choices we make are strategically aligned to where we can win in market and that every major initiative is anchored in the role the brand needs to play. The third element is marketing effectiveness. This is well beyond measuring return on investment for activity in market. It is an integrated approach that spans consumer understanding, strategy, execution and investment is about knowing what drives brand strength and commercial outcomes across every step and adding ourselves to account against it. The broader point is this: under the new operating model, we want this quality of thinking and discipline to become and across our priority brands. Penfolds shows what good looks like, and our job now is to scale that capability. Strong foundations only matter if they translate into how a brand shows up in market. For Penfolds, our strategic clarity turns into distinctive globally consistent brand expressions across every major touch point. At the base of that is a clear understanding of the brand's DNA and brand codes. Those are the distinctive assets and signals that make Penfolds recognizable and active. On top of that, it's an ambition around cultural relevance. And in the case of Penfolds, we use culturally relevant creative partners to take our core DNA and codes and authentically reimagine penfolds for the next generation of wine drinkers. Implementation of a global activation program, we call it a brand thematic allows Penfolds to implement a creative idea that is consistent globally but can adapt to a local market need. Consistency does not mean sameness. It means a single coherent narrative expressed in ways that feel relevant in different contexts. And finally, a motive brand storytelling. Our brands have real meaning and stories to tell. In the case of Penfolds Grange, we hear the message of once tasted never forgotten, a sentiment that broadly appeals to consumers globally. What this has given to Penfolds is a genuine competitive advantage, complete clarity on who the brand is, where it is going and how it should show up. And that is exactly the capability we now want to apply more broadly across our power brands and regional heroes, each with its own distinctive point of view. This slide shows the outcome of that disciplined approach. Penfold's demand power, as measured by Kantar, has strengthened across a key number of growth markets, most noticeably in Asia. Demand power is a measure of brand's inherent market strength, measured by how meaningful, different and salient it is in the minds of consumers. In effect, it links closely to how much share could command if all brands were equally priced and distributed. And these results tell us that the brand is becoming stronger in consumers' minds. And that is exactly what consistent brand building should do. It should deepen relevance, strengthen distinctiveness and increase the underlying power of a brand over time. So this is not just a brand metric for its own sake. It is a proof point that the foundations are working. When we build the brand consistently and stay close to customers and consumers show up in distinctive ways. We strengthen the brand's ability to command demand. This then supports premium positioning, better resilience and stronger long-term value creation. It's also why we see Penfolds as both a benchmark and a playbook for the broader portfolio. Innovation plays a very specific role in our model. It is a strategic lever to grow brand strength, create new demand and increase long-term value. There are 3 ways that we think about that. First, innovation helps us paint the future and disrupt the category. It allows us to get ahead of emerging trends and redefine how and when wine is enjoyed. Second, it helps drive cultural and generational relevance for our portfolio. That matters because we need our brands to connect meaningfully with the next generation of drinkers and with the occasions that matter to them. And third, it builds brand strength by leveraging each brand's DNA in ways that increase desirability, relevance and distinctiveness. So innovation is one of the most powerful ways we express a brand's point of view, and extend its relevance. And done well, it helps us stay contemporary recruit new consumers and unlock new occasions while strengthening the core equity of priority brands. To make innovation work at scale, we have in what we call a dual innovation system. The reason for this is straightforward. We need innovation to do 2 things at once. It needs to drive value to the core business that we're in today, and it needs to create the future growth platforms of tomorrow. The first engine is core innovation. This is about delivering incremental growth in core and growing wine occasions. These are line extensions and adjacent players that fit our strategic portfolio pillars and existing capabilities. The objective here is value creation, price realization, a richer mix through high-value SKUs and ultimately, margin accretion. In other words, stronger profit growth not just more volume. The second engine is breakthrough innovation. This is where we create new wine occasions and more modern propositions. It includes new formats, new taste profiles and ideas that better meet the needs of the next generation of wine drinkers. The immediate goal is not margin optimization. It is to open up new demand pools, recruit new consumers and create future optionality. That balance is important. Core innovation strengthens the business now. Breakthrough innovation ensures we do not get trapped defending the present while the market evolves around us. AI is already becoming an important enabler across marketing but one of the strongest applications for us is in innovation. We are using it across a number of stages in the process from consumer insight and market research through the concept testing, creative development and decision support. The big advantage is speed and precision. AI helps us identify consumer tensions and flavor white space earlier. It generates ideas faster. We can test them more quickly and move through validation loops with much more efficiency. It does not replace human judgment, it enhances it. The team still curate, refine and make the decisions. But the process becomes much faster and more effective. The example on this slide is a strong illustration and in this case, the product moved from idea to minimum viable product in under 90 days. Historically, that sort of process could take up to 24 months. So the value here is not just cost or productivity. It is the ability to test, to learn and launch at a pace that is far more compatible with how consumer trends move. That gives us a real competitive advantage in building the future pipeline. The final piece is investment. We are changing the way we invest across the portfolio to be more supportive of long-term brand health. There are 2 important ideas on this slide. The first, you heard about from Sam and Tom earlier, and that is that we are upweighting investment behind our power brands and regional heroes. That is a significant step change from where we are today. The second is that execution matters just as much as the quantum of spend. We need to deploy that investment to strengthen brand equity and maximize commercial impact. It is not about spending more in a blanket sense. It is about concentrating resources where we have the best opportunities to build demand and create value. Balancing the long and the short building demand power, strengthening pricing power, growing our consumer bases and staying visible consistently and, of course, measuring outcomes rigorously. These principles improve the effectiveness of A&P over time and support sustained growth across the core portfolio. We have 3 power brands in the portfolio. These brands will receive the largest focus of resource and time. Each brand holds a distinctive position within the portfolio and the category. Penfold sits at the pinnacle of modern luxury wine. It combines heritage, craftsmanship and innovation and has the scale and reach to influence how luxury wine is understood and experienced globally. DAOU has redefined luxury carbonate. It has brought a more contemporary lifestyle expression to the segment while still being anchored in world-class wine making. That gives it a powerful point of differentiation, particularly with the new generation of luxury consumers. Matua plays a different but equally important role. It is strongly associated with refreshment, which is one of the key growth spaces in wine. It has helped expand occasions, recruit younger drinkers and show how disciplined innovation can build both relevance and growth. So while the brands are very different, the principles are the same: best-in-class brand building, deep consumer understanding and innovation that keeps the brands relevant over time. Before I wrap up, I want to refer back to my earlier 3 points. The new operating model ensures we are implementing an elevated and holistic approach to brand building. This ensures that we execute in a much more deliberate and consistent way and remain focused on sustainably building equity across our portfolio of power brands and regional heroes through consistently applying marketing principles, innovation that drives relevance and growth and disciplined investment, our model will ensure that our brands remain connected and involved with the needs of our consumers. Thank you. And I'll now invite Sam and Tom and I think Justin Pipito to the stage as we open up for our first Q&A session.

It's Michael Simotas from Jefferies. I just wanted to talk a little bit more about the review of the U.S. business that you've called out. You went through some potential options, a couple that I'm interested in whether that be under consideration. Firstly, given the significant change in the distribution landscape in the U.S. would you consider going back to direct distribution in any of the key markets that you're permitted to do so? And secondly, is there still some consideration about whether it would be better for shareholder returns, if you were to exit the U.S. market altogether?

Thanks. I think the U.S., we still -- the good news in the U.S. is the focus on execution that's really driven some momentum inside of those power and regional brands that we identified. So that's still a core area of focus, and I think underpins the health of the brands and the opportunity that in the market. I think the power of Ascent is that we projected 5 years forward. The U.S. has got lots and lots of changes going on in the market, and we've understood those changes in the context the growth expectation of those priority brands. And then we've ladded that back to our supply chain to make sure that if there is any misalignment that we've that we address it. And we've seen that, yes, there is some misalignment not uncommon in the U.S. We've seen that in the bourbon industry and quite a lot of wine companies that have had to go and make sure that there's no misalignment because that misalignment ultimately will drive inefficiency and affect our margins profile. So that's really what we found, and that's what we're addressing very proactively. When it comes to the strategic options, we talked about the operating model and going back there and seeing if that we can drive any more efficiency. We are looking in the supply chain and seeing whether or not any of the initiatives that we've identified can be accelerated. And then I guess, we're looking at any other options that might present themselves in the market, including sales of wineries and/or brands -- it's just started. It was a result of a cent that we decided it needed a deeper look, and we'll come back to the market when we've got some more insight, some more concrete actions against that strategic review.

Okay. But it sounds like you want to be in the U.S.

I think that -- I've always said this from the very early days is that the U.S. the largest and most profitable beverage alcohol market in the world. So job #1 is to make sure our brands stay strong and access all of those opportunities. We've got to make sure that we found through these strategic options a way to deliver sustainable financial returns on the capital that we've got invested in the marketplace. That's why we're doing the review. We don't have all the answers yet, but everything is on the table.

Okay. And then a second one for me, if I can. Just a more financial question. Can you give us a little bit of help with how cash flow will evolve over the next few years? So presumably, FY '27 is another fairly difficult year for cash generation. How should we think about the cash opportunity as we move into '28? And in particular, I presume there will be reduced supply intake. So that should benefit working capital. You've called out some divestments. How much additional cash flow could you get in that year from those things and potentially other initiatives?

I think it's a core area of focus, Justin is on the stage, so I'll ask him just to lean into it. We've got several levers. Obviously, we're focusing on trying to maximize cash generation inside the business. We've got tight controls on spend inside the business. We've got a disciplined approach to CapEx and the CapEx requirements of the business going forward. And again, our earnings profile will play a role in that. So real focus and discipline around how we manage cash and working capital to maximize cash generation. JP, I don't know if there's anything else to add there. Some of the divestments, we've taken a pragmatic and sensible approach. We understand very clearly that this is not an environment where we'll necessarily get fair value for assets. So we're being pragmatic. We're understanding where the opportunities are, and we are being sensible about the role they'll play in our delevering assumptions. So actually, where we've gone out and tested market with that pragmatic approach, we've been quite pleasantly surprised by the interest we've got on some of the areas of the business that we'll look to vest.

Yes. And I think I might build, Michael. I think you read on 27 is probably not too far off. We see leverage peaking this year. back to -- under our 2x by 28 if that earnings trajectory starts to pick up in '28, but we'll continue to look at particularly on the intake side, with the supply, what we can do to manage cash flow more aggressively than what we've got in the plan.

[indiscernible] from Jarden. Just the first one for me, it's not -- 19 Crimes is not in the presentation. Is that for sale now? How does that business look on what's supplying there?

I couldn't hear.

19 Crimes.

No mention of 19 Crimes. What is the plan for 19 Crimes? How much is going to be worth if you can sell it?

I think what we've been clear about today is the 10 priority brands, the power brands, the regional brands that we are planning to focus on and play a core role in our growth trajectory into the future. where we're looking at tactical brands, transitional brands, divested brands and the brands that we're going to retire, some of those have still got relationships with customers. We need to take a pragmatic approach. They've got a role to play as we transition our supply organization. So we're not being overt in declaring the role they're playing as that becomes appropriate, we'll announce that to the market. But we're being very clear around the brands that are going to play the biggest role in the future growth of the business and the future margin of the business.

So is 19 Crimes a retiring brand or it's a site for sale brand because presumably, it's still quite attractive in terms of volume it produces. .

Certainly is playing a role in some markets, and we're cognizant of that role and any change or any category that it will go into will be done very cognizant of that role that it's playing in a specific market and also with customers.

And just second one for me. Just in terms of the guidance, so the guidance you put out qualitatively for fiscal '27, you said, I think, sort of flat to slight or not down. Just 2 things I want to understand is, one, if you're clearing through your Penfolds inventory, through fiscal '27. presumably, it's going to be Q1 of fiscal '27, given the 150 run rate. The market is growing. So your Penfolds anti to put the disclosure changes should grow and I would have thought with the [ R&DC ] reallocation of some of the inventory that you've got a big hole that you should be able to grow, particularly if you talk some of the depletions in the U.S. So what there sort of feels to me to the ports in terms of the ads -- where are you seeing the big detractors in terms of offsetting that, that's going to mean as closer to flat?

JP, on that one.

I think it's really around Americas. And I think we've said -- or we will see today at some point, we expect to balance shipments and depletions view for '26 in December, we talked about the need to take some stock out of the market there and would do so over a 2-year period. So a lot of that work has to happen in '27 and finish off in '28. So that's really the counter to those things you mentioned on the Penfolds side of things.

Yes. Sam. I noticed when Trump met with Xi Jinping recently, they were toasting red wine, and that was very public. I was under the impression that the austerity measures were still pretty severe. What's changed in the last sort of 6 months versus when they were introduced and are very, very stringent back in May and June of last year. And then your volumes in China fell off a cliff, hence the downgrade and we're seeing and no 1 believes the 40% depletions by the way. Can you give us some color on why that's changed?

Well, we can come back to that depletions number later, Chris. But I think that we'll get when Jack's on stage, give him an opportunity to talk about the dynamics that he's seeing in China. But what we're seeing in the market has been a gradual easing through those austerity measures, particularly in relation to banqueting a little bit more private banqueting, a little bit more at-home consumption. That's giving us a little bit more optimism of the market, albeit it remains challenged. I think that 2 things that we've done in the market that continue to support the strength of our Penfolds brand is one is really significantly reduced the parallel that's going into the market, which is giving us much, much more confidence through those first- and second-tier distributors. We're getting very, very positive feedback about the impact that that's had, the confidence that they've now got in the brand and their ability to continue to invest in the ground to grow. Some of the 40% is going to be a migration of the parallel that was coming in from outside the market. That's been soaked up very proactively by our distribution system. So the 40% has got some of that parallel volume built into it. And I would also say, and I always say this to you, basis that every time I go to China and see the power of the brand, it's behaving in a way that transcends wine. It probably even transcends beverage alcohol. It is a luxury brand that sits proudly on the table next to all of the Chinese power brands. And the Chinese New Year execution that we had in China was just outstanding we beat the market by some distance. So all of the actions and the initiatives that we have taken in China, the perspective that we've got on the growth opportunity in China, which Jack will bring to life, I think, in a really compelling way gives us unbelievable evidence that this will continue to be a growth engine for us in the long term. Will the China market recover? I think so. We do see some economic relief on the horizon. We do see some momentum across some categories in China. I'm ex luxury in China. I've seen some of the reported luxury performance from the China market. Again, not a like-for-like comparison. It's just a nice indicator that the consumer is coming back to life in that critical market for us.

Mike Toner from RBC. Just on the leverage reduction. I noted your comments before where you said you don't think you might get fair value for some of those divestments, but also noting that the leverage reduction is predicated on divestments per the deck. I guess I'm just wondering to what extent that leverage reduction is located on divestments and whether that's the right decision for shareholders if by your own admission, you won't get fair value for it?

Yes. As I said, there's lots and lots of things we're doing to delever the business, of which those divestments are just one of them. this very stringent cash management, what we're doing specifically on working capital, the earnings profile is all giving us confidence that we can to delever, albeit there is another lever in divestments, but it's not the only one. And I would say that the others that I've just mentioned are also significant contributors. JP, I don't know if there's anything else to add.

Yes. We looked specifically at that one, Mike, and I think the answer is we're confident we can still get to 2x at '28 without those divestments taking place. We think we've been pretty reasonable on realizable value and the time it will take to execute. But ultimately, that didn't take place. We still think there's a pathway to the 2x by F28.

Okay. And one quick follow-up, if I may. Just I'm curious kind of what level of growth you're requiring from power brands to be able to offset what appears to be probably quite a significant decline for noncore brands over the next 5 years and still hit kind of longer-term targets?

We're probably not going to give that level of detail, but I think it's fair to assume with the focus and the priority and the increase in investment and the potential we see across those brands that they're going to be playing a disproportionate role in our growth profile going forward. We've kind of said that through the presentation. And that's really how we're thinking about it. And we've got some great proof points. You can see that depletion trends that we've already got. We're relatively early in this focus on completely obsessed with how we show up in market and unlock those market opportunities. So yes, we think it will be disproportionate in relation to its contribution to our growth over that 5-year period.

Richard from CLSA. Sort of a follow-on from that one. If we look -- break down the 10 priority brands represent 35% of volume today of revenue. So if we flip that around, your nonpriority is still 2/3 of your volume and about 1/3 of your revenue. So I mean, can you -- I mean, the big concern always has been in terms of trying to read yourself of that tail is the stranded costs. So is there -- I mean, can you paint a picture here whereby the priority brands are growing at a rate, clearly, they're taking a bigger, bigger share of volume and revenue. But can they do so at a rate whereby you overcoming the decline and sort of balancing out the stranded cost issue at the same time?

I think that's right, Richard. I think we do see the migration to the power brands playing a positive role in their contribution to margin and the simplification that, that focus brings to the supply chain. There's a real benefit in all of that. And I talked about it when you looked at the SKU reduction and the brand reduction, wouldn't underestimate the role that plays. We recognize that, that phased reduction of volume, which will be very considered. That's why we've got these tactical and transitional brands, we've got to manage that over time so that we've got offsets to some of the things that you've just mentioned. And that's all been built into our thinking. I think in Australia, we've been on this journey for a while. The commercial brands and some of the divestments we've made in our supply footprint and our production footprint have helped us move in the direction of the Ascent program. But in the U.S., as I mentioned, there's a bit more structural misalignment. We're leaning into it. We understand it. We've got to make some bold decisions there around ensuring that our supply footprint matches that demand signal. And I guess what that strategic review is all about is about finding ways to kind of accelerate that so we can build a better earnings profile for that business faster.

Okay. And then just the one-off costs, $220 million to $260 million, a bit more color there. Is that pretax? Is that all going to land in -- will be booked at least in FY '26? And then what mix of that actually is cash?

It's pretax. It won't all be FY '26. We're sort of working through accounting point of view what's right to recognize issue and what will carry forward into future years. Obviously, this is a multiyear transformation. So some elements and initiatives won't be taking place until '27 and '28. We've got a later in the deck, which gives a bit more insight into the cash versus P&L component of that. So we'll be happy. We'll come back to that later on.

Phil Kimber from E&P Capital. Sorry, right up the back here. Two questions. First one, just following on from Richard there. I mean maybe a simple way to say it is, you've got a longer-term EBIT margin target, but obviously, it depends on what the revenue is going to be. So is there a situation in this turnaround where there's actually not a lot of absolute sales growth. It's a much better business with a better quality of earnings, but actually, there's not a lot of sales growth over the next few years, medium term, let's call it, 5 years?

I think they'll I think in the middle period of that, there will be a transition from the top line perspective, where we're offsetting some of the managed brands with the growth brands, and you would expect that. I think within that the shape of the P&L looks a lot better through that high-margin business that is going to play a bigger role in the portfolio, certainly see though, when you start looking at how we're thinking about brands and commercial excellence, the focus that we're going to bring to those brands, the investment, the execution discipline that will be a huge enabler for our growth into the future. We've got some things to work through this transition period. But I think growth is still a core part of how we're thinking about the business going forward.

And then my second one was just on depletions and you've talked a lot about it. And I mean, maybe if you could give some additional color as to how the business will be managed more from a depletions point of view? Because I guess the big issue respectfully is there's been $0.5 billion of sales in the last year or 2 that are sort of being taken out of the business because the inventory didn't clear through the channel.

Yes. I mean, effectively, this is trying to get a view of offtake closer to consumers or shoppers where they're purchasing. Obviously, in developing markets, some of that information is harder to get. But rather than measuring shipments, which effectively go into warehouses and inventory, we're trying to start to meet what goes out of warehouses to support stores, restaurants, bars, and second and third tier distributors. So in the U.S., that's relatively simple because we can go to our distributors, and we can go into their systems and we can remove in China and some of the emerging markets that a more robust system of trying to understand what's going out of our distributors of our wholesalers through QR code measurements through inventory checks and through a really robust process that allows us to get a much, much more accurate view of the genuine offtake that sits in the market. That's a process that's audited by a third party. They do spot checks of inventory. They reconcile that with shipments, and we get to round it out to make sure that there's no discrepancies that we would be reporting. But really, it's about understanding whether or not the activities, the programs, the brand-building exercises are having a material impact on what consumers are purchasing.

Sam, it's Craig Woolford from MST Marquee. Your strategy makes a lot of sense, but it certainly feels like a spirits or beer company, how they would approach a market fewer bigger brands I'm sure that's not a surprise to you. But is there really any evidence that, that works in the wine industry. It's very fragmented both at the customer level, the retailer out of the shop, they shop a lot more brands. So does it really actually work in line as it does in beer and spirits?

That's an interesting parallel. I think this is not about kind of an industry, if you look across many, many different segments, generally speaking, brands that stay relevant for longer period need investment, they need innovation, they need to evolve with consumers and customers in the channels that you operate. And if you don't, if you leave them and they haven't got enough investment to them, they slowly decline. And I think in the wine industry, there's countless numbers of brands that haven't managed to stay relevant, stay invested to continue to evolve. So yes, I don't think it's a parallel to beer. I think just generally at a brand level, it's important that we're really clear about the consumer segments in our markets that we see the biggest opportunities. But we haven't got overlap in relation to how we're accessing them. We're really clear. This is the brand that is going to go and access that opportunity with that consumer segment in that market, in that channel. And then making sure that you've got investment to ensure that you can communicate with that target consumer that you can build equity for them and that you continue to refresh through how you engage with content and innovation. If you've got too many brands you end up having subscale investment that ultimately doesn't achieve any of those goals. So this is about being really targeted across markets, regions and the portfolio to ensure we've got brands to play a role in the way we see the consumer in the future. And we've got appropriate investment to continually engage with them. So it's been very targeted. It's not just beer, you can go anywhere and find that most really great consumer goods companies have got real clarity around their portfolio and real investment to ensure it stays relevant for decades.

Yes, understood. The other comment about white line and refreshment. Just wanted to clarify, is all of that opportunity from your existing brand portfolio? Or do you have to bring in or either invent or buy some brands?

What I might be slightly over excited about Penfolds white. I think that that's a huge opportunity for us. And you look at kind of white wine trends, shardetrends globally, how they play in luxury markets. We've been up in China, and nearly every distributor spoke to us about what's happening with White Wine there. So just amplifying what we do in white wine through the established portfolio that we've got within Penfolds is a huge opportunity. Marlboro Savignon Blanc in many, many markets around the world just continues to play an enormous recruitment role for wine. -- it's accessible. It's fun. It's refreshing. And it brings younger consumers into the category. So I do think that, again, that's going to be a critical component of the work we do across the portfolio. So lots and lots of opportunities within refreshment, within white wine to bring people into the category to bring people into occasions I'm really excited about formats. I mean, one of the first things I saw coming into the category was that you walked down the wine aisle and I suspect, apart from a few labels, it probably hadn't changed much in decades. But nearly every other category in a supermarket or in the market has had massive disruption through a format they have adapted to convenience and the trends. And again, I'm excited about the role innovation can play through refreshment to engage new consumers with new formats. I should have got you to answer some of these, KK.

I mean the only thing I would add to that is as we've looked into the future and worked out where is the growth going to come from this modern refreshment space is a space where we're not starting from scratch. We've got some great brands that are delivering at the moment in this space. Matua and Squealing Pig, 2 of those that are doing incredibly well across multiple markets. And then you write innovation is a really exciting space. And it allows us to -- as the category evolves, things like no low, different ways that consumers are engaging with the category. We're set up with those brands with a platform for growth around unlocking those opportunities.

Sam, Shaun Cousins, UBS. maybe a question for Tom. Can you just talk a bit about Penfolds. It seems as though the supply chain, there was a little bit of a loss of control there given the size of the gray market volumes that went on. Could you just talk a bit about what happened why that was the case? And you had a lot of accountability as part of your new operating model. That seems great. Maybe was that not in place there? I'm just sort of curious around how you lose control in that way.

Yes. Thanks, Shaun. Maybe I'll start with the positives that we're seeing at this point in time and over the last few months from the actions that we have taken, certainly over the last 6 months, that has involved getting much more rigorous, much more forensic on identifying where the sources of parallel were coming from. So we have a much more detailed compliance system, if you like, with all of our customers and partners around ensuring we've got real visibility at a depletion level that we can ensure aligns with any shipments that we're putting into those customers. And that's right across the board, right? So the positives of taking those proactive measures and some of those steps haven't been easy because they've created very challenging conversations with many of our customers, new levels of compliance that everyone needs to play by. But ultimately, the positive that we're seeing, and Jack can talk about this later and Sam referenced it earlier, is actually the noise and the scale of parallel volume that's coming into China and disrupting our core distributors in the domestic business is significantly reduced. Some of that is now being picked up through our authorized channels, and that's why you'll see the 40% depletion growth is us capturing more of that business that was previously coming through parallels. And I think, look, the learning has been for us that over time, we probably had some leakage and that crept up over time. we've taken really decisive action, and we highlighted that we were going to take action when we realized it was creating issues in our biggest market in China. The discipline that we've applied that those new ways of working, new policies means sitting here today, feel really comfortable that we've identified have managed shipments and allocations accordingly and we're protecting our core business in China, which continues to go from strength to strength. Now we've always said parallel is something we will never be able to eradicate okay? But I've never felt more comfortable in the position where we are today that we've identified, made changes to how we manage allocations and shipments, putting new processes in place to ensure that we are able to monitor on an ongoing basis where we're seeing spikes in demand, are they correlating with genuine domestic depletion and consumer demand.

And was it just a lack of curiosity around your business? Or was there just not that rigor before? I'm just curious around what -- this is -- what you're saying is very sensible. It's just unclear why you wouldn't be doing that? Or was that just a desire to hit this 15% earnings growth number? I'm just trying to understand what the culture in Penfold like will you allow this situation to occur?

No, I think, look, it's part of the transformation that we're driving across our commercial agenda, we're really tightening up on every element of our operator. And so what we're seeing now by going that next level detail driving that more forensic view of the data, driving higher compliance on visibility of depletions right across the board has meant we're now at much clearer and able to identify where these situations were arriving in the past.

Great. And my second question is just in 2021 at the Investor Day, you also outlined a 25% EBITS margin target. Since that time, you'd bought DAOU and Frank's that are part of -- 1 of them is your priority brand. Another 1 is 1 of your sort of key brands there as well. Just curious if we think a bit about the ambition to sort of have a 25% long-term EBIT margin target, how would you attribute that or lack of progress of advancement there. Is that because the wine industry is weaker? Or TWE has executed poorly and it won't be able to do this? It's interesting that you've made quite a lot of changes to adding higher-margin businesses in terms of brands that are very good, but it doesn't see a change to where you were in the '21 target. I'm just keen to understand was it TWE or how would you attribute it between TWE and the industry please?

Thanks, Shaun. I mean I think that what I've seen in the beverage alcohol market from '21 to '26 just couldn't be more different. '21, we were sat in the middle of COVID. I was sitting in a different business, but looking at trends that we've never seen before. And there was a level of optimism and a level of opportunity that existed in beverage alcohol that we're all very excited about. I think as you come post-COVID, then you start looking at cost of living and the different economic challenges, the world just does look a lot different. And it's not just in beverage alcohol, I think, in consumer goods more broadly, the cost of living pressures. Some of the economic challenges have meant that the outlook on these categories is really significantly different. And I guess that's what we're responding to. We're sort of understanding what that looks like and saying, okay, where there are mismatches or things that we have to lean into like inventory levels like parallel or what we've got in our supply chain, we're doing it. And we have to do that because of the outlook that's so significantly changed from what it was in '21. I can hardly hear you with a microphone, Shaun.

Sorry. So you attribute that more to -- it's just the industry. It's not that TWE hasn't executed as well as you'd hoped or you don't anticipate you could execute as well as you would have planned?

Yes. I think Sean, the focus that we've got on driving executional focus, discipline of brand building would tell you that I could see a significant opportunity for us. to codify this across the business end to end and take us up to a completely different place in relation to the role that can play in our growth. So yes, I think it's part of it. But I would just not underestimate the extent to which the world has changed over that period of time. And I think what we're doing is making sure that we lean into it. We're understanding where the differences are. We're working through it. So we do build and I think someone else said this, just a much better quality of earnings profile once we've got through it.

Sam and team, Caleb Wheatley from Macquarie, just down here. My question is just on how you're thinking about sort of leading the market. So you've made the comment that you want to be ahead of category growth. I appreciate there's going to be some movements around brands, et cetera. But if I go back to the third slide, I don't know if you necessarily agree with these forecasts, but luxury forecast to grow 1% category is sort of flat to down. Yes, just how are you sort of thinking about the long-term market opportunity and then within the brands across the treasury portfolio, the propensity and the materiality to outperform?

Yes, I think that's why we've elevated brands in execution because we recognize that in the market that I've just talked about with the economy that we're talking about with the outlook for wine that the growth is going to be much more muted than perhaps what we've seen in the past. So a core engine for us to grow is to outperform the market. How do you outperform the market? You get really, really good at execution. You get very focused on brands, and you get very precise with where you're investing and where you want to grow. We're picking pockets where we see the biggest opportunity. We're aligning our portfolio to that, and we're putting a big engine of investment behind it, so we can outperform the market and deliver the growth that we're talking about. And with the brands that we've got, the positions that we hold and a real execution focus, I can't see why we shouldn't be able to outperform.

And is that sort of brand specific or geography specific or a bit of both? .

Well, I think when we look at markets, we're looking at regions. Part of the reason we're putting ourselves back into regions is just to have real clarity around the expectation for that region, the accountability that we've got and focus of resources behind one portfolio to drive that disproportionate execution benefit. So I think it's got to do with regions. It's got to do with how we're aligning through the operating model and that rigorous focus and prioritization on growing brands and execution in those markets. So it's kind of the whole thing that today is about is trying to showcase how this all comes together to support the outperformance that we're banking on.

Okay, sure. And a second question maybe for Justin. But just in terms of the destocking that you've called out in China and in the U.S. Can you just give us a bit of a flavor for sort of the assumptions underpinning those time lines, especially around sort of market growth and then the performance of the tertiary brands underneath that?

I'll try to do the color. I mean, yes, so Americas, in December, we said there was, I think, 300,000 cases that needed to be rebalanced over the course of 2 years. As we get to June, we expect shipments and depletions to be broadly aligned so that we're not going to have any progress on eating into that inventory and trade. We -- I mean, we're expecting above-category depletions growth. It's modest at single digit above the category that's broadly flattish in luxury at the moment. And that's sort of the assumption that underpins us in the time line on that piece. For China, it's a bit different. We're still strong growth there even in a market that is flat, but we're performing very well. That expectation is that by the end of F28 '27, we're broadly completed with that process.

It's Sam Teeger from Citi here. Just keen to understand how you think about the life cycle of a wine brand as you grow your priority brands faster than the rest of the portfolio, how do you ensure that this growth is managed. So these priority brands don't lose the relevance with consumers that don't start to mature or you don't end up with overstocked channels, which impacts pricing. I guess a number of years ago, you could argue that 19 Crimes would have been a priority brand and now it isn't. And it did have some innovation and some investment and it didn't play out the way you would have thought not you, but your predecessors.

Yes. Yes. Yes. I think understanding the life cycle of brands is, of course, critical. I've talked a lot today about maintaining relevance of our brands through really understanding the role that we play in the minds of consumers, ensuring that we stay relevant in the way that we consume the occasions that we consumed and then we use innovation as well to make sure that we are relevant into the future. The brands that we've chosen in the portfolio are very closely aligned to the growth segments that we outlined earlier around luxury red luxury white and modern refreshment. And when we've chosen these brands for the portfolio, we've looked at how distinctive they are in market, what does their demand power look like? What is their growth profile? And do they have the right financials that underpin commercial success. And so we feel like we've got the right portfolio for growth. We feel like we've got the right brands that are sustainable over a long period of time. They hold a great and distinctive position in consumers' minds, and we're going to work really hard with the basic fundamentals of brand building to keep that buying sustainably.

Sure. And just a follow-up on the 40% that everyone is keen to talk about. I appreciate the really good progress you've made around parallel. But having been up in China recently. I think the market is growing anywhere near 40% I'm just wondering besides for the progress you made in parallel, how much of the growth is being driven by you expanding distribution further changes to rebates, changes to pricing? And then how should we think about depletions in FY '27?

I feel like Jack will be the perfect person for you to answer that question too because he's got quite a lot of detail in his presentation around not only where we see the growth opportunities for China, but also what's delivered the 40% growth. I mean the big opportunity that we see is really at that brand level that starts to interact with Baijiu. So as you look at the category of wine and you say, okay, well, that looks challenged or flat at best. When you start to look at how Penfolds is interacting with Marti and opening up the opportunity there, it reframes everything, just because of the pure scale of Baijiu in China. I mean it is enormous. So we think that's a great opportunity for us, and we are targeting bid distributors. We're targeting Baijiu channels and Baijiu restaurants so that we've got a very visible presence in those huge opportunity areas. I would say that the Chinese New Year execution was also outstanding. We got feedback from the market when we were there that we had completely outperformed through all of the gifting programs that we had for that occasion, how we've done pop-ups and executed our campaign through the period. So all of those, plus the migration of parallel has really meant that our China business continues to completely outperform the market. That's a depletion measure. Again, that's coming from what we're measuring through the methodology that I outlined earlier into the market. And when we've been -- and both Tom and I have been a couple of times this year and got feedback on it. It really does come back to the strength of the brand, how we're expanding our distribution profile and the role that CNY played in our performance. So I just might -- Tom -- sorry, Jack will probably give you a lot more insight into that and also his excitement around the potential of China going forward. I don't know, Tom, anything to add?

No, I think it's important to acknowledge that the overall market is doing it tough at the moment. So that's not our perspective that we dispute. But all of the things that Sam just outlined means we're bucking that trend, and it's being recognized. And actually, it had a virtuous cycle element to it because we're now attracting more wholesalers, distributors who may have previously been focused on Baijiu, which is doing it very tough at the moment as a category. And they're seeing Penfolds is an opportunity to bring new business that is moving through generating cash and profit for them into their portfolio. So a number of positive factors that are impacting our outperformance for sure. But yes, acknowledging that the market is going through a period of transition, and we're facing into that new normal.

Bryan Raymond, JPMorgan. Just first 1 is on the A&P spend as a percentage of NSR for the power brands and regional heroes at 12 and 8. Just interested in where they would sit rents that a material uplift? Because I imagine they're already taking an outsized share of your overall 8.5%, they'd be -- I would assume it'd be above that. So I'm just interested in how much of that is an uplift. And then how you think about the ROI on that in terms of how it flows through to NSR growth and the outlook for those 10 brands?

Yes, look, it is an uplift at a total level. We are increasing our A&P investment, as I outlined from 8.5% up to 10%, focused on fewer brands. So they're going to get more of that uplifted spend. You're right, Penfolds has always been reasonably well supported, but now it will be even better supported, particularly across a broader range of markets and opportunities. I mean we talk about India on a slide, but we still see lots and lots of markets outside of China that offer huge opportunities for Penfolds. So some of that investment is going to be going to really unlock that opportunity. And the middle class in India is the fastest-growing middle class in the world. We all read about it. And they do enjoy alcohol, albeit wine is still underrepresented. So Penfolds is exactly the type of brand that with a disproportionate level of investment can open up a huge opportunity like India. On the regional brands as well, it's been patchy. KK talked about some are well supported in some places, but it's not uniform, it's not precise. And it's not really understanding the opportunity that we're investing behind. And I guess that's what the ROI comes to. It's like kind of how long do we think we should start to see a return on this investment, either in brand equity or on sales growth or on kind of the number of points of distribution we've got. It all comes together into a suite of measures that tell us whether or not we're getting the type of return from the investment in the market. It's all part of the plan to be much, much more disciplined through execution and really understanding whether or not the money is paying back.

So just to be clear on that, so the 12 and the 8 are up materially from where they are currently or?

I mean, collectively, we're going from 8.5% to 10% at a company level where we're focusing it on the 10 brands that we're talking about. And it differs across markets. But yes, there's a material uplift in supporting those brands to deliver the disproportionate growth expectation we've got.

Okay. Great. And then just a couple of answer questions then. Just the pace or timing of the synergy realization is million over 3 years. Should we assume the run rate sort of 1/3, 1/3, 1/3? Or is it back-loaded, front-loaded? Any guidance there? And then the 2x leverage, getting back on the 2x leverage, are you assuming the dividends are spent or is that restarting in the process?

JP, you want to...

Yes. On the leverage piece, we are assuming dividend is suspended until we trend towards that 2x target. We'll cover that later on. In terms of the phasing of the synergies, I won't really get into that today. Fair to say that a lot happens day 1, as we transition to our new operating model. So there's a big step in F28 '20 serving that will annualize into F28 '28, but there are initiatives that do take the full 3 years to come through in some P&L.

Okay. I think everyone deserves a coffee. So thanks for the questions. We'll come back after a coffee break and start the next session. Thank you. [Break]

Good morning. My name is Jack Wu, and I am Managing Director of the TWE Greater China region based in Shanghai. I was previously hold Head of the Greater China for Penfolds, the role I held for 5 years, and I have been in TV for 12 years. Over this time, I have watched the Penfolds brand grow into a most powerful wine brand of scale in China. The Penfolds brand and a very unique proposition for Chinese consumers. Its Chinese is [ Wen Fu ] translated to five fold prosperity, a very positive meaning in Chinese culture together with strong color and wine quality. We are at the beginning of our journey, and I see enormous future potential for Penfolds brand in China, and I'm pleased to share with you today how we are going to deliver this. Greater China remains one of the most important luxury beverage market in the world. There is a strong appreciation for heritage and status and a meaningful headroom for premium brands that can execute well. At the same time, consumers are selective, channels are evolved quickly, and the cost of the poor execution is high. Our confidence in the space on a very strong cap position, the power of Penfolds and the route-to-market and execution model built over many years. In China, growth is available but only to those who can convert brand strength into disciplined execution. Our ambition is to shape the next air of the wire in Greater China. We aim to lead the lock-in wide category and also expand wide into the new consumption occasions. We are well pleased to achieve this ambition with our core capabilities, including a deep understanding of our consumer, a leading portfolio of wine, which resonates strongly with the Chinese logic consumers, strong and growing brand equity, a focused national and regional disputer platforms and our experienced local team. Let me start with the snapshot of the Greater China region. Mainland China and Penfolds contribute the majority of the volume and NSR for the region. With our revenue case of approximately $370 and EBIT margin 43%, reflecting the strength of our portfolio in this market. These are attractive financials and they underline an important point. Greater China, is a strategically important region for TWE, where our brand strength, portfolio mix and route to market can generate significant value. has the leading market share in total wine category and locked category in both online and off-line channels with both channels in strong growth. From a channel mix perspective, wholesaler is the largest channel with over 60% share, followed by e-commerce at 22% and bricks and mortar retail at 11% and travel retail were making up the balance. While we have been steadily growing our share over the past 3 years? We are not complacent, maintaining leadership by constant attention to channel quality, consumer relevance and market discipline. While we continue to see China as a highly attractive lock to wine market, we believe the opportunity for TWE and Penfolds extends beyond the luxury wide category to the Baijiu consumer. Affluent consumers already participate in the premium alcohol occasion whose needs are evolving. Baijiu, as you know, remain dominant in China, but changing consumer behavior is creating an opportunity for luxury to take share over time, including through moderation, broader taste openness balanced gender appeal and relevance to gifting and business occasions. This represents a great opportunity for luxury wine and Penfolds, in particular, to grow share within the alcohol market. Consumers also become more intentional and that works in our favor because Penfolds has a strong loans established position in China and strong logic credentials. China has a complex tier route-to-market system covering online and off-line channels. Our distribution model has been developed using the key learning we have acquired from operating in China over several decades. Route to market in China is not simply a matter of scale. It's a strategy capability. Our model designed to balance reach with control and expansion with protection of the brand equity. In our experience, success requires not just the broad distribution, but the right distribution, with a broad partner and a clear governance. We partnered with a selected number of the Tier 1 national distributors who work with us exclusively on select part of our portfolio across China. While the cold portfolio is disputed through a regional network of the long-term distribution partner who each have the very specific geography coverage. We also share directly to the Tier 1 e-commerce customers, national key accounts and online to offline customers. This partner then either dispute through the Tier 2 network or set directly to the liquor store, depending on the channels or roto-market model. The benefit of this model is flexibility by channel, geography and portfolio segment, while remaining direct relationship with a channel that met most for visibility, control and growth. That made us because channel role are changing quickly. Online, offline are increasing connected and different parts of the portfolio need different route to market. We have 3 clear execution priority for Greater China. This priority form the execution system that will drive to the next phase of the growth for us. Online distribution to improve assess and brand control, off-line distribution to expand quality coverage and commercial excellence to improve discipline and consistency. Now turning first to our online distribution. The online channel is significantly growing in China and we are investing to strengthen our position to drive channel ownership and growth. Online matter is not because of its size, but because it shaped how consumers discover, evaluate and purchase brands. In China, the path to purchase is highly digital, even when the final transaction happens on off-line. So for a brand, that means online is all about -- it's also about presentation, authenticity, pricing discipline and trust. There are 3 key online channels. Cross-border e-commerce, where we will build greater presence through the direct channel ownership with our own fracture stores and a strong network of the disputed stores. We are targeting to have in place 5 fracture stores and 40 distributor stores. Domestic e-commerce. This is a channel where we will accelerate sales across the domestic platforms. In addition to our existing 5 fraction store, we are targeting to have 60 distributed stores. And online to offline retailer, where we aim to capture new consumers through fast-growing instant retailer channels and aim to significantly increase our presence. So each channel play a different role: cross-border for trial and discovery domestic for scale and repeat purchase online to offline for convenience by immediate. So our objective is to win across that ecosystem with the right mix of the direct ownership, partner capability and brand control. For example, when we operate through our own fracture store in cross-border e-commerce, we gain better control of assortment brand presentation and pricing. That not only improve conversion in the channel, it also set a clear reference point for consumers and partners across the wider online and off-line market. In terms of our second priority, driving offline distribution. We are pursuing a multiple tier of approach to drive depth and coverage of our distribution across the market. Today, we have 30-plus Tier 1 distributors, including national and regional players, 200-plus core Tier-2 distributors and approximately 13,000 quality outlet. Our focus is on deepening partnership with high-quality disputers expanding coverage and targeting Baijiu outlet. That share luxury wine wide consumer allocation profile. Offline remains critical for luxury wine, particularly across gifting, dining and relationship-based occasion. So our focus is not just ending outlets, but improving the quality and relevance of distribution. We will increase our regional coverage with a focus on core cities and high-growth province with both core and growing growth market, having a significant opportunity for coverage expansion. Growth in China is not uniform. Core cities remain essential, while high-growth province and cities continue to offer strong opportunity. Our approach is to deepen in core market while selectively expanding into attractive growth market to improve both depth and breadth over time. In relation to our third execution priority, commercial excellency. We are making significant digital data technology investment to support execution across our customer, consumer and sales teams. With customers, we are strengthening contracts, incentive management and joint business plan, driving market discipline and traceability. With consumers, we are ensuring authenticity through the digital tools and our sales team are improving execution through automation, data insight. Commercial excellency is going to be core enablers of our profitable growth in the future. It improve how we allocate supply, manage partner incentive, protect pricing, track product and focus our team on the activities that matter most. These capabilities have reduced linkage, improve accountability, strength partner quality and support healthy long-term return. Authenticity is also critical. Our digital tools have reassured consumer and trade partners while improving traceability and visibility through the channels. A practical example is the use of the digital authentication tools, which allow consumer and trade partners to verify product problems. That gives the consumer more confidence in the brand, which is also helping us identify channel linkage earlier and response with better allocation and governance. We are taking meaningful action to address pricing dynamic in China, including restricting shipment evolve in apparel import, creating more painful cross-border channels, expanding domestic distribution, tightening allocation of the key SKUs and increasing the traceability and governance. The result of these actions will be more volume through our offight channel network, pricing stabilization to ensure the channel value chain profitability and also most important, sustainable long-term depletion growth with earlier signs that these actions are having the desired impact. So our approach is disciplined and long term. We are focused on improving market quality through tightened allocation, strong governance and reduced opportunity for parallel flow. That matters because healthy pricing architecture supports healthier depletion, better distributor behavior and stronger brand equity over time. So in conclusion, we are confident in the Greater China opportunity because of the long-term attractiveness of this market, the strength of handfuls, our portfolio and the execution model we have built to deliver sustainable profit growth. This market requires focus, local knowledge, strong execution, and we believe we are well placed to win. Thank you. And now I'm going to hand over to [indiscernible].

Thank you, Jack, and good morning, everybody. I'm Ben Dollard, President of Treasury Americas. It's a pleasure to be here today to provide an update on our strategic priorities. We are in a period of reset with expected EBIT impacted near term by our focus on reducing customer inventory, particularly in fiscal '27 and '28. Beyond that, by rising per unit COGS as we sell through our recent vintages and adjust our supply chain to align with future portfolio needs. As Sam mentioned in his opening, we are working to accelerate actions to address these elements and improve profitability. As we work through these challenges, the strength of our brands continues to stand out with positive depletion momentum across our key brands led by DAU, Frank Family and Matua. Stabilization of distribution, particularly in California following the exit of RNDC and our transition to breakthrough beverage group has supported the improved depletion performance. Our ambition in the Americas is clear: to deliver world-class wines and powerful consumer experiences in the world's largest wine market. Knowing our consumers better than anyone else innovating to keep our brands relevant is critical to achieving this ambition. Based on the first half of this fiscal year, the Americas region, comprising our luxury and premium portfolio of brands saw revenue per case of $176 and EBITS margin of 11%. The U.S. represents over 90% of regional NSR with power brands and regional heroes contributing approximately 2/3 of this, 19 Crimes being the largest contributor outside of priority brands. We are the leading luxury portfolio in the U.S., the segment of the market which remains in growth and is expected to do so moving forward. Our market share has reduced around 1 percentage point in the past 2 years, partly impacted by the disruption from the distribution changes. Strengthening our share through ahead of category performance is a priority. Our channel mix is well diversified. Bricks-and-mortar retail remains the largest channel at 56%, followed by direct-to-consumer and on-premise at 20% and 15%, respectively. Our strategy in the Americas is focused on 3 clear priorities: first, continuing to build the presence of our portfolio in market, leveraging our leading market position to drive depletions growth ahead of category for our power brands and regional heroes. Secondly, driving excellence in execution, ensuring that we drive distribution expansion for our key brands across the large and expansive U.S. market. Thirdly, scaling our brand-led direct-to-consumer model through excellence in end-to-end consumer experiences. Our brand-building strategy is focused on a number of key areas: defining modern luxury through storytelling and bold experiences. DAU is a strong example of this. We bring the brand to life through more than 50 experiential events annually, reaching over 1 million consumers, bringing world-class winemaking and hospitality life in the nation's top wine markets. Frank Family is a strong example here with successful activations in key markets across the nation, introducing new consumers to the brand and Napa Valley. Finally, owning contemporary refreshment to recruit the next generation of wine consumers. Matua is the #5 [indiscernible], #4 New Zealand [indiscernible] in the U.S. and is delivering strong growth with the consumer trend to lighter styles amplifying our positioning of the brand. Matua Lighter is now a top 3 better-for-you [indiscernible] in the U.S. and through partnership with music festivals and cultural platforms is expanding the consumer base, including those new to the wine category. Pleasingly, we're now seeing strong results from brand-building initiatives with our key retailers, driven by the success of programs leading into the spring and summer period. As we consider this performance, we do note that the prior year was impacted by disruptions at RNDC. Nonetheless, it is pleasing to have a return to growth, and we remain focused on continuing this momentum. We have also seen very strong depletions growth away from [indiscernible] tracked channels, notably up 11% in our independent retail accounts to date in half 2. Turning now to our U.S. route to market, where our evolved footprint reflects recent changes to the U.S. Recent changes to the U.S. distribution landscape. Our strategy has been to maintain a diversified distributor network and ensure that we have the best partner for delivering our business in each market. The landscape is evolving. One year ago, RNDC announced its exit from California, initiating our transition to breakthrough beverage. We are now looking forward to partnering with Raus Beverage Group as they acquire 10 markets from RNBC. Russ distribution strength and execution capabilities position them well to represent our portfolio of brands. Our top-to-top engagement with Raus led by Sam and myself has been very positive to date. The deal officially closed last week and transition management is well underway to ensure minimal disruption to our performance and build momentum with [indiscernible]. The initiatives that Tom spoke to earlier regarding execution excellence are of paramount importance to our team in the U.S. Rigor in joint business planning and holding ourselves and our partners accountable to delivery of our plans are important components of ensuring we are executing well by channel. Expanding distribution will remain a key focus. As the chart shows, over the past 3 years, we have delivered consistent growth in points of distribution for our key brands across both off and on-premise channels. Leveraging our market leadership and national network are key elements of our success. We see plenty of headroom to continue targeting further distribution growth and increasing accessibility of our portfolio to the U.S. consumer. DAOU continues its nationwide expansion, moving beyond its historical concentration in California to build scale in markets such as Florida, Texas and New York. Frank Family Vineyards is strengthening its presence in the on-premise and key retail accounts supporting continued depletion momentum. Matua continues to grow its footprint nationally, primarily in off-premise, particularly as innovation like Matua Lighter gains traction. The opportunity to expand presence across chains, independents, on-premise venues is significant and will remain a big focus. Turning now to direct-to-consumer. This is a critical channel from both a consumer engagement and brand building standpoint. We continue to drive growth and outpace the market in our core Stellar door and membership experiences. As part of our focus on building scale in the direct-to-consumer platform, we are prioritizing several growth opportunities, delivering premium guest experiences, including the grand reopening of the [indiscernible] this July. This major milestone will provide guests with an opportunity to experience world-class wines and hospitality in a beautiful new setting. We welcome over 300,000 visitors a year to our brand homes in California and aspire to be famous for the experiences we create. This access also gives us the unique opportunity to connect with and create relationships with new and loyal consumers. Secondly, our ability to capture first-party consumer data, both at our brand homes and through our experiential marketing efforts will be critical to our future growth. Thirdly, we have a best-in-class experiential marketing capability, both at our brand homes and in market. Acquiring consumer data gives us permission to engage with new consumers and ultimately leads to a more one-on-one relationship. We'll take advantage of our partnership marketing efforts to access new audiences that extend beyond our current consumer base. Lastly, we continue to improve our ability to measure the most compelling and cost-effective tactics to acquire new consumers. Future DTC growth will come from creating a unified consumer acquisition model where winery visitation, events and digital all work to acquire, convert and retain high-value consumers. So in closing, while we are navigating short-term structural headwinds, we have an exceptional portfolio of brands, a distribution network that is stabilizing and retail relationships that are strong. Our focus will be on market execution and performing ahead of the category. Thank you. I'll now hand over to Angus Lilley, who will cover ANZ and Europe. Thank you.

Good morning. I'm Angus Lilley, Managing Director of ANZ in Europe. I'm pleased to be with you today to share the strategy and priorities for our portfolio in ANZ and Europe. Having spent time in trade over recent weeks, meeting with a number of our key customers, I'm filled with confidence that the positive feedback these customers have provided regarding the change to our operating model, coupled with the strength of our portfolio will hold us in good stead in these regions moving forward. Our strategy in ANZ in Europe is built on a powerful portfolio of market-leading brands, ranging from iconic to innovative with each brand playing a clear role targeting different consumers and different occasions. The portfolio includes Penfolds, iconic in nature in its home market of Australia and throughout fine wine channels in Europe. Squealing Pig, a brand that has been on an incredible growth journey in recent years, leading in the modern refreshment space. Wins, one of Australia's favorite and most collected wines. [indiscernible], Australia's favorite [indiscernible] with growing consumer appetite across lighter varietals. And finally, Matua, an incredibly strong New Zealand [indiscernible] brand in the heart of the varietals and segments driving category growth. Our ambition is to use this powerful portfolio to scale and innovate new offerings to drive growth in ANZ and Europe, energizing the category, driving new occasions while recruiting new consumers. Looking at a snapshot of the region. Our portfolio mix is reflected in the first half '26 key metrics with NSR per case of $75 and EBITS margin of 12%, reflecting the scale of the nonpriority Australian commercial brands that we continue to retain and whose decline we will continue to manage in the coming years. Australia, where we have a 14% share of the wine market, accounts for the majority of NSR, followed by the U.K. and Continental Europe. As we look forward, we expect the contribution of Power Brands and Regional Heroes to grow from their current level of 50% segment NSR and ultimately drive our growth. The only exception is 19 Crimes, included here in Other, which remains a key contributor to our European business and a top 10 brand in the U.K. retail market, a brand we will continue to support through strong in-market execution. From a channel mix perspective, retail represents the key sales channel in both Australia and Europe, responsible for over 70% of sales. Our ANZ and Europe strategy is built on a simple 3-part execution framework, underpinned by our new operating model of going to market as one portfolio and one team. First, driving the core, leveraging our leading brands and deep retail partnerships to drive immediate growth for our regional heroes and power brands. Going to market as one portfolio allows us to streamline our partnership with key customers and sharpen our effort and focus on the brands and activities we will be investing in. Second, we will drive growth by expanding distribution into independent retail and on-premise channels. One team and increased investment and resource against these channels will mean better execution, drive distribution activation and allow us to partner in a way that was harder to achieve under our previous model. And finally, unlocking future luxury growth through direct-to-consumer channels and expanding our presence in fine wine channels led by Penfolds, building on and accelerating the work currently underway in that division. This will be an important area of focus given the D2C channel is outpacing the traditional off-premise retail market, along with the on-premise channel becoming an increasingly important one for consumer interaction, engagement and a great connection point for consumers with our brands. Growth scope research tells us that on-premise alcohol occasions grew 6% in the last year here in Australia. Squealing Pig is a great case study to highlight our confidence in our ability to deliver growth in our core portfolio. The brand's growth for over a decade in Australia has been underpinned by strong brand-building fundamentals [indiscernible] spoke to earlier, along with deep retail customer partnerships. We've scaled from a single SKU brand in one retailer to a top 10 brand in the market with highly successful innovation, including spritz and no and low alcohol options, a key driver of growth in recent years. Importantly, the brand resonates strongly with younger consumers and presents a great opportunity to recruit new consumers to the category. I'm confident that as the portfolio comes -- as the TWE portfolio comes together as one, we will continue to grow Squealing Pig here in Australia and have a great opportunity to replicate this success in other markets globally. Pepper Jack is another example of consistent scalable growth of our core portfolio. It is the clear #1 [indiscernible] sold in Australia with strong execution in store and in partnership again with key retailers driving consistent volume growth. More recently, we've expanded the brand beyond [indiscernible] into new varietals, lighter styles in line with the broader category trends spoke to in his introduction earlier today, allowing us to recruit new consumers and expand the occasions to which Pepperjack caters. Turning now to our second execution priority, expanding for growth. Our prior operating model divided resources and limited our ability to fully capture opportunities across all channels. To rectify this in Europe and Australia, both the on-premise and independent retail channels will be a focus for us moving forward. Both present opportunities that can be unlocked through consolidated and strengthened resource in market and importantly reflect where we see consumer growth. On-premise has always been important. However, as consumers are becoming more choiceful in the decisions they make when it comes to consumption occasions, we are seeing a structural shift to the on-premise, which for now accounts for 1/3 of all alcohol consumption occasions. Growth is being driven by social and emotional occasions that consumers cannot replicate at home. However, wine under-indexes in the fastest-growing occasions, presenting an opportunity moving forward, and our portfolio is underweight relative to the category, something that we are focused on changing. Our key initiatives focus on growing dedicated resource and modernizing the wine playbook to match the informal social occasions consumers are looking for. The independent channel is increasingly important as consumers shift towards occasion-based shopping. Increased sales and field presence in both Australia and Europe will allow us to better execute in this channel and unlock the premiumization and recruitment opportunity that these channels present. And our final execution priority, unlocking future luxury growth. Future value in Europe will be driven by a focused strategy anchored around Penfolds and unlocking the opportunity presented by the luxury fine wine consumer in this market, of which there are many. It is a story of being exceptionally clear on where we can win and ensure we have the right resource aligned to this. Firstly, through La Plasta Bordeaux and broader negotiate networks, which give us access to a highly influential and premium distribution system. Secondly, by strengthening our presence in farm Wine retail, ensuring Penfolds is positioned alongside the world's leading luxury brands. Thirdly, through curated high net worth consumer experiences, creating deeper emotional connection and reinforcing brand prestige. And finally, through brand activations and cultural moments, partnering with iconic platforms and events to build global relevance. This is not a volume-led strategy. It's about building long-term brand equity and value through the right channels. Importantly, these capabilities will extend beyond Penfolds with learning supporting future growth aspirations for DAOU, Wins and other luxury brands within the portfolio. In summary, we have a clear strategy, a powerful brand portfolio and a more effective operating model to position ANZ and Europe for long-term growth. Together, these strengths will enable us to better support our customers, connect more meaningfully with our consumers and unlock the full potential of our portfolio across our regions. I'll now hand back to Tom to discuss the emerging markets.

Thank you, Angus, and good morning again, everyone. As part of our new regional operating model, we have established a dedicated emerging markets region, which brings together key markets across Asia and the Middle East. Now just this week, we have finalized an internal appointment to lead this new region. So for today, I'll be sharing the strategy for this region. This new region is more than a structural change. It reflects a clear strategic choice about where we see long-term growth for TWE. We're building on strong existing foundations with a well-established footprint of Penfolds across multiple markets. These are markets where the wine category is evolving. There is rising affluence and consumers are becoming more familiar and interested in wine. Together, this creates a really compelling long-term opportunity for future wine demand. And our ambition here is really clear. It's to build a growth engine for TWE by scaling luxury demand and expanding with discipline across these high potential markets. Similar to Greater China, the portfolio mix in emerging markets is led by Penfolds, which drives a strong revenue per case and an EBIT margin of over 40%. Southeast Asia is the core of our footprint, contributing about 85% of net sales revenue. We already hold the top market share position in Singapore, Malaysia and Thailand. Our strategy for this region is built around 3 execution priorities: Firstly, driving growth in our core markets, which include Singapore, Thailand and Malaysia, where our focus is on scaling demand through sharper execution and category leadership. Our second priority is to seize the new frontier. This is all about investing ahead of the curve to shape the category and unlock long-term growth in markets such as Indonesia, India and the UAE. And our third and important priority, expanding with discipline in all markets, where we're laser-focused on tight distributor management and execution rigor to ensure that our growth is focused on sustainable long-term growth. So turning to our first priority. In our core markets, Penfolds already has strong brand positioning, something Christie covered earlier when she outlined the Kantar demand power metrics. These metrics are a great reflection of both the strength of the Penfolds brand and the sustained investment we have made in building that brand over recent years. So from here, our focus is on converting that brand strength into accelerated depletion growth. We'll do this by expanding distribution and availability in a targeted manner with fine wine and high net worth channels representing really attractive growth opportunities. On the slide, you can see our current and targeted levels of distribution by market through to fiscal '27. This demonstrates the step change we are driving. In Thailand, we're focused on expanding beyond the Bangkok hub through a structured Tier 2 wholesaler model. In Malaysia, our growth focus is centered on a number of key cities where fine wine retail and high net worth consumers are prevalent. And in Singapore, we're redesigning our route to market to unlock underpenetrated channels and significantly scaling up distribution across fine wine retail, the on-premise and high net worth consumers. In new frontier markets, our objective is to build distribution, establish brand relevance and actively shape the development of the wine category. In India, we'll be focusing on building early distribution across priority cities and deepening relevance with gifting and occasion-led consumption. We're very excited about our Penfolds gifting innovation for Diwali, where just as we've done so successfully in China, there's a great opportunity for us to grow our cultural links to the Indian community. In Indonesia, we will build high-quality distribution and target high net worth individuals and Chinese communities through targeted partnerships and activations. And in the UAE, we'll be prioritizing high-value channels and increasing visibility through direct retail partnerships. Our third priority, expanding with discipline. This continues the theme of elevating commercial excellence right across TWE. This will include a step change in joint business planning, anchored in clear shared objectives and measurable outcomes with stronger accountability across our partner network. We're also increasing our focus on data capture and reporting, establishing one source of truth for critical data such as depletions and inventory positions. This is essential to ensuring we're delivering growth in a healthy and sustainable way. And finally, ensuring our in-market execution translates our plans into outcomes, executing our priorities with taste and consistency. So in summary, emerging markets presents a compelling and scalable growth opportunity for TWE. We're approaching this opportunity with clarity and intent, scaling demand in our core markets, investing early in new frontiers and executing with discipline at every step. With the strength of the Penfolds brand and a proven model for building luxury demand, we're confident in our ability to unlock long-term growth across this region. Thank you. And now we will open up for Q&A, and I'll be joined by Angus, Sam, Jack and Ben.

It's Tom from [indiscernible]. Just on gray market, now that you've kind of not closed it up entirely, but mostly, where did it kind of get to in terms of sales in the past? And which regions was it in? Because I guess I'm asking because I want to know like how much are these regions potentially overstated historically because of that particular issue?

I think it's...

I think it's fair to say most of it ended up in China. That's the strongest market, the biggest market. And there's well-developed channels all across the world to deliver product back into an enormous market like China if there's arbitrage opportunities. So I mean, I think that's where the bulk of the volume in the parallel channel went to. Is that?

No, no, sorry. So where were you selling it to -- in which markets were you selling it to? Was it Australia? Was it Asia? Was it other markets?

Sorry, question, Tom Yes. No, I think I'll get Tom to chime in here, too. But I think, again, on the back of that development -- developed trade, it can come from anywhere. But the bulk of it from my perspective, from what we've learned has come from Southeast Asia and Australia.

And as we've done the work to identify where it was coming from, it's become clear that we had pockets of it right around the world, given the nature of those channels. But correctly, Sam pointed out, the key regions where it was coming from was Southeast Asia and Australia. I think just to give you a sense of the scale of regions as they stand today, those H1 F '26 numbers, that is a very clean domestic business across all of our regions. So that is the base that we're now looking to grow all of the regions from with all of the shipments that are going into those regions being domestic consumption led by domestic demand.

Great. And just one for Ben. Why is on-premise growing so strongly for you and off-premise so weak? Like usually, brands, I would have thought are strong across all channels, but you seem to have this really strong channel and then a really weak one. a? And then b, how do you track where your inventories are in the on-premise channel? Like we've obviously seen some overstocking in the past. I just want to make sure that, that issue isn't maybe rearing its head in the on-premise channel in particular.

Yes. So let me -- so let me tackle the last part of your question. I'll come back to the channel mix question. So the inventory and the reduction of inventory that we're about to embark on in fiscal '27, '28 is a wholesale inventory. So it's sitting in our distributor network. As far as inventories are carried in retail, I'm not concerned about a buildup there because it's tightly regulated certainly by the retail environment. So we -- with the shape of our portfolio, clearly, on-premise is a very key component of brand building. And I would not characterize our business as weakness in the off-channel because I actually think we're doing an improved job in terms of execution in that channel. But for our portfolio, particularly at the high end, that on-premise business is essential. And we have started to see a rebound in that space, which has been encouraging. But it's no more important than our off-trade, and that's chain and independent retail. So I'm comfortable that the right execution kind of plans are in place, but that on-premise from a brand building standpoint is essential.

[indiscernible] from E&P Capital. Two questions. One was just in China, one of the trends that we're hearing from distributors is they're actually going a lot more direct-to-consumer as well. So I'm just wondering how that changes the economics because presumably, the price to the end consumer, the more layers you have in the distribution channel, everyone marks up their numbers. If you start removing some of those layers, does Treasury get to share in that? Or does that really just flow through to the distributor? I'm talking China here.

I think Jack, you are best placed to answer that one.

It's a good question. So I think you're thinking about China, there's 350 cities. So that's why you look at my slide talking about the distribution. And we have a very clear sort of like a discipline where do we go. So like in my slide, talking about 189 cities, which is we are going to deploy the sales guy, we are going to invest A&P. We are going to have a core Tier 2 distributors. However, having said that, because in China, you got so many consumers, you can't go to one by one and try to sell direct to them. So you need to rely on the distributor to sell through. The second point I want to make is when you said why to China, particular for Pen, because you don't want this to be a transaction. You want to give them experience. You want to give them some kind of a memory experience. So that's why we need to leverage the distributor system to sort of like cope with that kind of opportunity. Yes, we did have the people on the ground, but that's kind of supporting the distributors. And this is a similar model that the other cab is running. And this is how we see the future. But with what I mentioned about the commercial excellency with the tools, data, we can really capture that kind of data in the future. So to answer your question, yes, it could be some upside in the future, but it's a phased approach. We need to get more and more clear where are they, who they are, what do they drink and then come up with the right portfolio and the right route to market to these consumers.

And my second one was just on the priority brands. I went back and looked at the last slide at the first half '26 result and what brands have come in and what ones have gone out. You talked a bit about the ones that have got out. But the ones that have come in are Wolf Blass and Coldstream Hills. So can you talk a little bit about why they've moved on to the priority list when they really weren't on there before?

Well, I think [indiscernible] wasn't defined. But certainly, Coldstream Hills, we see as having really significant opportunity, particularly in lighter styles and some varietals like Chardonnay and [indiscernible]. So having a cool climate winery with the kind of credentials that Coldstream has, we think has got an enormous opportunity for a complete brand revamp to access some of the opportunities in the category. So there's a reason why that's come in. We think it's got huge latent equity and really significant opportunity. I think we haven't defined [indiscernible]. It still plays a role for us in certain markets, and we'll be managing that through some of the other categorizations that we've mentioned previously. But certainly, Coldstream, we really see as having a significant opportunity in some core markets within the group that sits on the stage.

Potentially, the other shift, I think, possibly related to wind could have been the change. And I think for much the same reason that Sam spoke to Coldstream and the bones, the elements of that brand that that have seen us elevate it as a regional here, I think wins is much the same in terms of the opportunity, the credibility, the equity of wins and the quality of those wines, I think, gives us confidence that we have the ability if we apply some of the right sort of rigor and brand building capability that KK spoke to earlier, we believe that can be a real growth engine for us as well in the markets.

Richard from CLSA again. I just want a couple of questions on Matua. You obviously make a big bet on that one. It's calling it out as one of your 3 power brands. So I would love to hear a little bit of background. The fact it got mentioned in the Americas. So it would suggest that the Americas is probably the biggest market for Matua right now. I'm sure ANZ is pretty big as well, but I'd love to hear a bit of commentary there. But what I'm really keen to know, like Matua strikes me as a little bit of a flavor for the minute in terms of sub -- it's reasonably I don't want to say one dimensional, but it doesn't have as many dimensions as some of the other brands, I would suggest. And so how do you ensure something like Matua does not go the way of the 19 crimes? And really, part of that question is, hopefully, you've done some sort of postmortem on 9 crimes. We'll talk about this for Tom at the break. So what have you learned from that experience so you can sure that Matua doesn't go the same way?

Well, I think Matua is actually [indiscernible] first [indiscernible] Blanc. So it's a story that's been running for quite some time. This is not a sort of flash in the pan brand. It's the very first. So there's the starting point of kind of relevance and what we've done to maintain that through the investment. And we still see lots of runway. I mean, [indiscernible] Blanc is one of those categories that everyone's been waiting to see it drop off, but it never does because it continues to recruit new consumers in on the back of exciting propositions and the role that refreshment is playing in wine. So that insight has said, you know what, we've got an opportunity to put Matua into more markets around the world. Clearly doing exceptionally well in the U.S., [indiscernible] Blanc, particularly New Zealand [indiscernible] Blanc category that continues to grow. It just does, and we don't see any reason why that will stop. But when we talk about China, and I've talked to some distributors about it, particularly with female consumption really rising and the opportunity for them to look at different occasions with lighter style wine, we really see Matua as being a great brand to go and kind of engage those consumers and start to build our business on the back of it. [indiscernible] in the U.K. is still huge. In Australia, still huge and keeps growing. So there's lots of opportunities for us to take the platform to innovate off it to continue to develop assets that we think we can deploy in markets to grow brand equity in all these new geographies around the world. It's really concentrated on the U.S. and sporadically represented in other places. But as New Zealand's first S Vignon block, we think that story has got real legs and real opportunity.

And then from the learnings from the 19 Crimes, like -- and I know you've highlighted there's a different circle that's perhaps got more heritage now as the original. But tell me if you think it's an unreasonable comparison to make. But we've seen 19 Crimes built through, become a hugely important brand and despite like lots of sort of...

I might just start because sometimes new eyes gives new perspective on these things, and I'll pass to Angus, who's got a much closer representation. Firstly, on [indiscernible], I think Angus talking to the U.K. is still doing exceptionally well and driving growth and recruiting new consumers into the category, and we can see pockets of opportunity that will continue to be relevant for us as we go through this next period of time. I think it doesn't have kind of the roots of Matua that goes back decades to the establishment of Marlboro as the world's great [indiscernible] region. So there's a history and provenance in Matua that would lend itself to longevity in my view. 19 Crimes, look, the thing about 19 Crimes is it was an innovation. It was a bit celebrity led in a way, and we've evolved that into kind of [indiscernible] by [indiscernible] and then we've got into the 2-pack. So that's given us a platform to continue to innovate off if we want, albeit in the U.S., in particular, we've seen a decline in that core part of the portfolio. But Angus...

Yes. I think there's 2 builds I'd have and 2 key learnings probably, Richard, from -- in response there is, and Sam touched on it at the end. I think in terms of the importance of innovation in this sort of premium price point is so important to continue to drive growth. And I think the Snoop proposition, the 2-pack, some of these that sat under that Cali sort of arm of the brand, necessarily didn't pay back to the core 19 Crimes proposition. So I think as we think about innovation back into our core brand franchise, the squealing pig example I had up on the screen today, we're very conscious of making sure that any innovation we bring pays back to the master brand. I think that's probably one learning that as we look back and think about where we went with 19 Crimes, that perhaps the innovation and the great success we had was, yes, it was a success, but it didn't necessarily help the master brand in the long run, I think, is probably one. And then I think secondly, if you compare the mature focus versus 19 Crimes, I think at the moment, I would say mature is where the consumer is going in terms of refreshment, lighter, brighter. 19 Crimes perhaps is that core heartland of red blend at circa a $12 price point in the U.S. is a category that's probably declining as fast as any. And that's not just [indiscernible], that's across the board. So I think it's also a story of following the. [indiscernible]

Maybe one for Jack. We would be interested to get your views on Chinese wines. It seems like they're growing very rapidly at the moment. They do offer very good value and the taste has improved. Do you see them as growing the overall wine category? Or do you see them as taking share from foreign brands?

I think actually, if you look at the data, IWSR, actually, the wine category in China actually is shrinking. So if you compare with like 10 years ago, the overall wine category was shrinking volume terms like 70% value terms of half. Majority was driven by the Chinese wine because in the past, majority of that wine was sitting more sort of like commercial level. You mentioned about this why Chinese wine is getting better and better. Yes, that's the fact because we look at some of the sort of a region like Linha,hana because the -- I would say, in the past 5 or 10 years, the wine maker did spend a lot of time to really produce a good wine. And really, we see that kind of pay out recently. However, the reason why the wine category is shrinking is because they don't have a strong brand. So yes, you can argue it's a good quality wine, but no brand. And for the Chinese consumer, they are very easy. They want to look at the benchmark. Like when you look at the penpo, this is a pricing range I want to go into. If you ask me to spend like $500, I would rather go to some brand have a higher brand awareness because you definitely want to host your guests, host your family. I think that's something we see the opportunity. You probably hear like we also have this multiple country or portfolio because we are actually coming to build a category for the overall wine category in China. So I think, yes, it's a journey for us. However, I think it probably takes a bit of time to really get a bigger. But when I see mentioned in the slide, we are -- from TWE perspective, we are a category leadership here. We are not just coming to drive the pen for OT. We're coming to drive the category because we see that trend is coming, particularly we looking at like a modern refreshment. You probably hear like from the new a lot of Chinese brands coming to that category because they want to get the consumer back. The reason for that is because in the past 10 years, a lot of these try to kind of get this consumer taking away, and that's why the why brand need to take that consumer back. I think that's a journey for us.

Sure. And sorry, just to finish, I do think that whilst the Chinese wine is improving, the distance from where we see international propositions like Penfolds is still enormous, both in relation to quality and the perception of the brand. So yes, progress being made, but no threat to a brand like Penfolds anytime soon.

All right. Great. And the other thing we're seeing is the strong growth of these rapid delivery platforms, meaning that there's better price transparency and many of the restaurants and hotels there can't make the margins they have been able to previously because of these delivery platforms. How do you best position Penfolds for success in this backdrop? And what are you seeing from these platforms more generally?

I mean from my perspective, and Jack -- I'd like Jack to answer this, but it's just a big opportunity. The instant retailers they're calling it, where you can be sitting in a restaurant and take an order online and get a bottle in 7, 8 minutes is just exploding. So the opportunity for us to be present on that channel in the right way with the right propositions and participating is really huge, and that's part of Jack's strategy. I just would say, though, that there is a trend in China that's gone on for a long time, includes Baijiu and all spirits brands that restaurants are used to people coming in restaurants with a bottle that they've bought either online or offline. So that behavior is quite normal. It's the rapid rise of instant retail that's changed. And I think we need to be really considered and choiceful about how we participate because it's a huge opportunity.

Yes, one from my side, just Sam mentioned about the choice. If you ask me about Penfold in this kind of channel, I would say the most important for us is how can we make sure we have a discipline in this channel because from Penfold perspective, one of the successful factors for Penfold is because it's the logic credential. It's an emotional value that bring to the consumer. However, yes, you can argue like in an instant retailer, people is looking for the entry level, different format by probably in the commercial pricing. So this is a big kind of we need to be very careful. But within our new operation model, we did see the opportunity sitting there with the other portfolio. So now we mentioned about Squealing Pig, Matua or the other brands. And this is probably something we can play with that. But to the Penfolds, I think the overarching principle doesn't change. It's a discipline, right experience, right pricing to the right consumer.

It's Bryan Raymond, JPMorgan, over here. Just keen to -- now we have Jack up on stage, just to dig into that 40% depletions growth number a bit further. Just a clarification, first of all, just to be clear, is that from Tier 1 distributors? Or is that an overall? I'm just trying to work out how you think about the Penfolds brand getting into the hands of the end consumer, if that is at that 40% or if that is depletions from Tier 1 and then there's other factors that we need to consider below that, first of all?

Yes. I think that's the depletion, that's definitely from Tier 1 to the second tier. However, I want to point out is probably you are aware, there's a big shift right now change in China is we used to be a Tier 1, go to the Tier 2, go to the retailer. That's the kind of old model. The reason a lot of the liquid companies struggling because a lot of the uncertainty, a lot of this -- so like demand is not stable. A lot of these Tier 2 and retailers shop they holding stock. So that's why if I answer your question in another way is, yes, it's a Tier 1 to the Tier 2. But during the Chinese New Year, all these Tier 2 or retail why they buy from the Tier 1 because they got a demand. So that's why we feel that depletion is very helpful and it way outperformed the market during that time.

But it's a Tier 1 depletion number that we measure. And generally speaking, when you've got Tier 1 and Tier 2, the Tier 2s don't need to hold the inventory because that's the role of the Tier 1. So we rarely see anomalies in relation to stock on hand at Tier 2 because working capital is so important for them. And I think the opportunity for us as we expand to Jack's slide is how we flatten that out, put more Tier 1s in place, allow them to have defined geographic areas with really defined guidelines that we ultimately measure and hold them to account to. And I think that's the big opportunity, and that will give us an even more robust depletions number across a broader geographic spread. But right now, it's Tier 1.

Excellent. Just my second question is for the U.S. and the distributor landscape, obviously shifting a lot. With Rosé now picking up a lot of key markets, I understand it's far less disruptive than what you saw in California. But just thinking about the relationship going forward, I'm sure Rosé has a return on capital mindset around picking up these businesses from RNDC. How do you think that plays out for you guys? Is there a sort of change in economics that you might expect, even if there's not a disruption around NSR? Could you see them taking a larger slice of the overall economics of that transaction or the channel, I should say? Or is there -- do you think it's just literally the same structure continues with a different name? I'd just be interested if there's any second order effects we should be considering.

So perhaps I'll take the start of that, and then Ben, you can just chime in. First of all, I think Ben alluded to the relationship we've got with Reyes. This is a distributor I know extremely well, the CEO and I were colleagues in the past. So it's not a new conversation where we're going and saying, "Okay, how are you going to do this once you get it?" We have been in conversation with them for months, loading up SKUs in their systems, working with sales forces and ensuring that the business that they're taking over from RNDC is well aligned to what we see their role be going forward. And that includes the inventory reduction over the 2-year period. So that's been built into the trading terms so that we've got depletion goals that have aligned with them. We've got execution goals, joint business plans. And then we've got a targeted 2-year reduction in inventory plan already agreed with them. So that's just a little bit about how we're trying to think about this going forward under the new thinking around execution, depletions, growth, brand building as opposed to just shipment targets that load warehouses. Ben, I don't know if you've got anything to add.

You've articulated it well. I'd just say the one build to that is we've been aware of the acquisition by Reyes from RNDC for some time now. So we've mobilized a very thoughtful and thorough project team to ensure that any disruption that may happen in the market is avoided largely in terms of the momentum that we've got in the business. I'll just build on what Sam just said, which is we have very clear aspiration. And that aspiration and joint commitment has been, I think, worked through with Reyes, and they understand exactly, particularly when we think about the priorities within our portfolio. So I think it's a really exciting opportunity for us now to establish a new relationship and certainly with an organization that has incredible credibility in the U.S. That said, I think the joint business planning that we've established with RNDC will flow over to Reyes, and I think we're all over that.

Shaun Cousins from UBS. Maybe a question for Ben. Just two questions on the U.S. Maybe just the shipment depletion mismatch that you've got, '25 looks like maybe it was up to 600,000 cases where you're out of whack. I'm just trying to dig into what caused that. Was that a -- was it TWE not appreciating the change in the market? Was it overt optimism? Was it just a bullishness sort of there? I'm just trying to understand how you got into this predicament and then hence, how we won't be in this position again, please?

Yes. So I'll answer the last part of your question and get back to the first one. So we put real controls around the relationship between shipments and depletions, and it's largely in our joint business planning with our distributors as we move forward. So it's really aligning around that depletion ambition. And then over time, absolutely ships will equal depletions. Now obviously, over fiscal '27 and '28, we have a task ahead of us in terms of rebalancing that inventory. And so that is something that in collaboration with our distributors, we absolutely have planned. Now the first component of your question with regards to what happened to get you in that position. I think, look, clearly, the market has gone through a fairly dramatic change over the past 24 months. And we certainly saw that in California with regards to the disruption we had with RNDC. And that's a component, I think, of a broader evolution that's happening in the U.S. But most importantly, I think getting ahead of of that moving forward to ensure that our inventories are well in control, managing them tightly. But most importantly, the biggest priority is going to be on the health and quality of our depletions.

I'll just add, Shaun. I think the -- from my perspective, again, UI is easy to sort of reflect on it. But a lot of the contractual terms in our distributor contracts were shipments. And so if they wanted to get rebates and reward, then they needed to ship. There was always true-ups, but they were many years down the track. And I just think that it was a fundamental flaw from my perspective, easy to say that we didn't have a balanced view of how we were going to drive our business in a market like the U.S. That was a trend not just in TWE, in many businesses in order to differentiate themselves or try and get a disproportionate share of attention with distributors, they try and ensure they've got to buy the product, so then they've got to figure out through their own systems how to sell it because there's 1,000 suppliers in there. So it's kind of like how do you sort of get some sort of a surety from the distributor that you're going to get some attention to try and drive the business going forward. So I think that's a shift that's happened in the U.S. as working capital has become much more important and that the market shifted. We've now got distributors who just -- they can't afford to do that anymore. And possibly, that's what caused RNDC's issues. They just kept doing it. They kept soaking up working capital and suddenly, they were financially in trouble. So this shift where we go into joint business planning, where we're working with the distributor to build brand plans at a channel, at a store, at an on-trade at an off-trade level that we then wrap our terms around to drive the behavior that way as opposed to shipping is a fundamental difference. So I just add that to what Ben is saying is kind of what my perspective is coming in and really reflective of the shift we're making in the business in every region. We measure ourselves transparently through dashboards that reflect the strength of our business in markets and channels and stores that we operate. That will be visible across the organization, and that's what will drive conversations around are we delivering against what we need to do? And if not, what are we going to do about it? And what are you going to do about it in relation to your own personal ownership. So it's a cultural change, and I think it's a trading term change. Long answer.

No, no. Sorry, that's quite fulsome, which is pleasing. Maybe my second question is just around EBITs in the Americas. I think the market has got about 8% EBITs growth for fiscal '27. I just want to walk through some of the impacts -- should we expect shipments below depletions as you work through that inventory or not? And then you've spoken about rising COGS, there's a bit of a currency headwind. I'm just trying to -- given us the one division that we still have from the prior structure there or we can kind of put it together, just really to better understand that and that there's a lot of moving parts and there's easier for us to get lost or I could get lost.

Yes. Sean, good question. I think there's two parts of it. It's not just the shipments part. I mean the first way out of this, which is beneficial for both the brand and the distributors and us is driving execution, driving faster depletions, which moves that inventory down faster. So very early on, we recognized that was the fastest way for us to get at this issue was to deal with it in the marketplace where we compete against competitors, win share and drive depletions growth. Ben's slide talked about new distribution opportunities, just drive this product out at the right prices and find new opportunities so that we speed up depletions and lower the inventory. And then the second bit of it, when you look at that whole puzzle is to say, okay, well, we're also going to have to reduce shipments because we want to get at this as fast as possible without obviously causing too much financial distress for the business, and that's got to be done in a measured way over several years. So really, that's -- it's as simple as that. That's what we're doing on both sides. It's been built into the planning, and it's been built into the conversations that we've had with our distributors, and we've structured terms around it. Did I answer your question?

I mean -- so you're comfortable with the market estimates for maybe this 8% EBIT growth. I'm just wondering -- do you get EBITs growth under the new division of Americas in fiscal '27? Or does the shipments below depletion plus COGS being higher. I just -- I want to get comfort around what you sort of around the outlook for the Americas under the new division, does it grow in '27 or not, please?

Yes. We've given guidance through my presentation early on. That's the guidance we're giving. I think we've got a twofold approach in the U.S., which is to deal with the inventory and drive depletions growth. That's the answer to the question. And the depletions growth is really a reflection on the health of our underlying business in the U.S. led by those power and regional brands.

Sam Craig Woolford from MST Marquee. Just on that U.S. business, look, I was staring at Slide 70, which is the U.S. distributor route to market. And I can't help but think that it's landed as a way of circumstance, not deliberate. Is that really the best distributor model that you've got for the U.S. market? There's 9 different distributors in many states. It's not the main distributor?

Yes. I mean our strategy, and Ben can talk into this is that we generally try and find the most appropriate distributor in the market for our portfolio of brands given the strength and their expertise in the channels that are most interesting for us. That's generally the strategy. I think the partners that we've got across U.S. at the moment are really appropriate in all of those markets. They're strong. They bring distinct benefits and strengths in the core regions. Will that evolve over time? Possibly as we look at various options. But I think from my perspective, the transition from Reyes into, as you say, several different distributors has meant that we've kept the diversity across the U.S. within partners that we know well and that have strong positions in the states that they represent. Ben, anything to add?

I'd just put a little bit of color -- additional color into that. Over the past 12 months, we've been very -- particularly with what transpired in California, been very thoughtful with regards to the evaluation of our distribution network. And that's really assessing capability, how our brands are going to show up, the relationship we have with them. So I think exactly as Sam said, it's about what capability exists in each market. Certainly, big priority markets that's going to deliver our needs. I think the footprint that we have now is highly complementary.

Is it possibly a bit of an elephant in the room question. Is it possible to return to Southern Glazers in any state?

I think with regards to -- look, where we're situated right now, this is our distributor network, and that's all I'd say about that. We're just kicking off a relationship, an important relationship with Reyes. We have an established relationship with BBG and others around the country. So for right now, we're, I think, very clear on our priorities and where we're headed.

But we still have a good relationship with all of them. In the last 6 months, I've met every single one of them. And as options arise, we'll consider those options as to what gives us the best benefit in the state. So yes, all of the distributors in the U.S., we've got great relationships with.

Great. A question for Jack on China and the Penfolds brand. It seems like it's doing really well in its core brands, sort of labels, 389 and 407. Can you just give some sense on the performance that you're seeing outside of those two labels within Penfolds and what opportunity you see outside 389/407?

You're right. I think 389/407 is the key one for us. So that's why back to my slide talking about why we see the opportunity sitting in the Baijiu consumer because that's definitely the first two preferred SKU that we go for. And we did see in many business occasions. So probably you hear about like people talking about in the trade say, penal brand in the wine category is like multi in the Baijiu category, which is kind of -- you got a similar sort of position. So when you go to the business occasion, when people want to drink Baijiu and Penfolds -- Baijiu wine and they probably have a Matua and Penfold, which is -- that's where 389/407 sitting in that space. And we still see that opportunity continue to have in the next 5 years. If you're talking about that kind of growth potential and probably you hear about -- you know that the Baijiu market in China is 72% of the market share, why it's only 3%, right? And also, if you look at the premium Baijiu category, it's still quite big for us. So I think that's how we see the role for 389/407. However, if you look at the consumer, they will not go out to buy 389/407 every time. And this is the role that the product underneath is going to play. And we did see in the recent trend about we got this lower being, the depreciation is even better. We are run out of stock. And that's why we see the different layer of this product play in that kind of role. And for the luxury piece, I think that's the capability we are building. And everyone knew that from last year, we got this tough situation. There's a big kind of the shrinking for that category. However, we are building the capability. As I say, we still have a lot of this consumer we haven't touched. So I'm talking about 189 cities. We only cover like 60%. Yes, we did cover some, but we don't have a strong network. We don't have a strong distributor. So I think it's a journey, and it's going to be the disciplined phase journey for us. That's why we see with all the new model commercial accuracy with more tools, we can get this journey quicker.

I think wine to -- Penfolds...

I forget to say that, yes...

You can play a really big role. We think 311, there's a whole portfolio for us in white line on Penfolds completely untouched really. So lots of areas of the portfolio, not just the engine of 389 and 407, which we think have got really strategic roles to play as we build Penfolds into the future. So another exciting component of the growth story.

To build up actually, when Sam was in China, he asked one question to all the distributors, "What else we can support you?" So everyone is talking about white from Penfold. And actually, we see that -- and again, this is another space. If you think about a white play, I'll give you another example. When we have a business dinner for the lunch, someone preferred light, which is what it's going to take. So they want Penfolds white instead of a heavy rack, but maybe dinner, they will prefer the rack. This is how we see the different kind of demand coming up.

Michael Toner from RBC. Just back on the U.S. very quickly. Just on the line about the transition risk being minimized because of Reyes acquiring RNDC's full operations. Does that include the sales force as well? Because I would have thought that, that would be kind of a key aspect given Reyes hasn't historically luxury wine hasn't been their wheelhouse. And if they're acquiring their full operations, I would have thought that might include the sales force as well?

Yes. My understanding is it does include the sales force and all the relationships they've got in those various states and channels. So again, another mitigating factor is, one, they're used to selling our brands; and two, they're very, very familiar with the landscape that they're selling into. Ben, I think that's right.

Yes, that's right. So over the weekend, the transaction closed on last Friday, they welcomed approximately 5,000 employees into the Reyes network. And a very substantial component of that, obviously, is the logistics, but the sales organization that's going to affect activation in the market. So in that regard, if I take a market like Texas, where we have strong relationships, deep penetration, the team that's selling our brands today in Texas are going to be selling them tomorrow.

Okay. And just back to Slide 70 very quickly. Sorry if I missed the memo here, but who is your distributor in Illinois now for luxury wine. Because I thought that used to be RNDC and then Reyes was going to take it and now they haven't bought it. But I can see on the map here that it says the luxury is now other Illinois.

So Illinois is not a part of the Reyes transaction. It was in scope initially and then sell out. We maintain a relationship with RNDC in Illinois. And so RNDC is still in -- now we also have the premium part of the portfolio, the treasury Collective business is with BPG. So it's a split portfolio in the state of Illinois. The luxury portfolio is with RNDC.

It's Michael Simotas from Jefferies. A couple of questions on the U.S. Firstly, on the way that you are thinking about and reporting depletions, how confident are you that, that metric is reflective of end consumer consumption? Is there a risk that there is some inventory potentially accumulating in a different part of the channel down the value chain? And the reason I ask, and I know Nielsen and Zuakana are far from perfect, but the industry tends to run its business based on one or both of those, and it does paint a very different picture to the depletions numbers that you are providing.

Yes. Ben, I think well placed.

Yes, certainly. So in terms of the confidence we have in the quality of our distribution -- sorry, depletion data, I mean, it's industry-wide source. So I think all of us across the category, beer, wine and spirits feel very confident in the quality and integrity of depletion reporting. And so we pull that straight out of the system, and it's highly regulated. So with regards to the quality of our depletions, from where I sit, I feel very confident it's a good measure for our performance. And it's exactly as Sam said, we are getting far more focused on that as our primary metric in terms of our success and growth against our key brands. If I understand your question with regards to buildup of inventory in other channels outside of Circana, for example, I mean, all of the on-premise and all of the independent off-premise, I mean, they're controlling their inventory as any retailer would. So it's very difficult to build up inventory in those channels.

Can you actually see that, though, like what's sitting in a restaurant's inventory, for example? Because from what I understand, if a restaurant or like lots of restaurants are accumulating inventory, for example, that will be included in that depletions number.

Well, certainly, from a reporting standpoint, we get that information from our distributors. So absolutely, if you can see a channel building inventory, that will become very apparent to us, i.e., a retail account.

But it would be uncommon. I wouldn't see too many restaurants building up significantly.

Only if they're new accounts, right? Like if there are a lot of new accounts, which it kind of looks like there might be.

Still. Restaurants have got usually fairly tight management of their inventory, and they don't have huge storage generally. So -- but yes, if we saw -- if a restaurant was deciding to buy up pallets and pallets of wine, yes, that would be recorded in depletions, but it would be highly unlikely.

Yes. Okay. And then just the second question, and I might have missed something, but the reason for slowing the inventory rebalancing in the U.S., is that related to the distributor transition and deal with -- sorry, with Reyes? Or is it more related about -- to maintaining treasury's cash flow and financial performance?

I think it's a bit of both. We can't just turn it off. That would put a lot of financial strain on the business. So we're trying to take a responsible approach that says, look, if we do this in a measured way over a period of time, focus on depletions and try to mow it down faster through all of the initiatives there, but that's a responsible way of doing it. And certainly, if we can keep building momentum in the market, then we'll get through it faster.

It's Peter from Select Equities. Just a couple of questions on China. You spoke about stabilization in market pricing. Are you able to give us some color around how that's gone, what the trends are across the different bins and sort of further to that, what your sort of outlook might be to see some price growth?

I think it's important when we think about our pricing to think about the context of the market as well. And for those who are watching what's been happening in China over the last 12 months in the compression of some of the Mount end pricing as well, reflecting the changing consumption environment and the softness in the market. Clearly, we've been through a period of transition as well as we've brought product back into the market, reestablished our own pricing structures, and then face into the challenges around parallel coming in and undercutting that. So yes, acknowledging we've seen some pricing compression in our business. But since probably the start of H2, so in Q3, we've started to see the positive impact of less parallel volume coming through, a greater share of our own authorized channels showing up, particularly in e-commerce data that is obviously where the price visibility comes from. Look, we need to be conscious of where the market is at the moment and where the consumer is right now. Ideally, we would be seeing some improvement in our pricing that's visible to consumers over the coming months. We're pleased that we're not seeing further declines in that and hence, why we're saying it's a stabilization. But we need to be conscious of where the market is and where the other brands that lead the market are. But I think for me, the really important piece as we think about pricing is, is the value chain still delivering profitability to our partners. And that's a fundamental measure of health of our business today. And yes, it is. Certainly, at the very top end of the portfolio on Grange and 707, we're not where we would want to be at all, and that's where we're seeing some of the sharper pricing that's available. And one of the actions that we're taking is actually let's pull back on how much we're actually allocating to the market. So that we're not pushing more volume in, we're pulling volume back and actually looking to enable that price to stabilize and improve over time.

We've got a journey that we're working on with our distributors. I think just to add to that, it's fair to say that as we've kind of taken the parallel away. Some of our distributors have been also competing for that volume with their margins. And that hasn't helped us in relation to trying to restore pricing in the market to where we would like it to be. So all those things Tom talked about, just a little bit messy as we get forward, and that's where the discipline comes with our distributors to ensure they adhere to our policies around pricing and the geographic boundaries.

Just to add a little bit color on that. Actually, just echo with what Tom said talking about that from my local operator perspective, it's a nice problem to have. The reason I say that is if your product can't move, no one is coming to trading that brand for you. So there's a big kind of I would call sort of external challenge we are facing, probably you might be aware because a lot of this low price was driven not from our distributors, it's driven by the platform because a lot of big platform, particularly during the shopping season, they want to source in this fast-moving brand coming and having some sort of like a subsidiary and then try to create more traffic. And this is something from a brand perspective, it's a headache. It's not just Penfold. If you look at the Matua, all these big brand, Baijiu brand, we are all facing the same challenge. But how to solve that, I think this is down to what Tom mentioned about the discipline because we need to find out who sells to that and really kind of tracking the product, make sure it's not doing again and all the stuff. There's so many underneath what we need to build on that. But again, it's a nice problem to have because otherwise, if your product can't move, no one is coming to trading this product for you. And that's we need to be very, very cautious on that.

It actually leads into my second question, which was you spoke about the reduced allocations of Grange and 707. Can you give us any color on the other bins and the lower tier bins and other SKUs in terms of reallocation?

I think the way we're looking at it, as Sam alluded to earlier, is we're thinking about our business at a very granular level. And so we're working through the outlook for each of our regional distributors and all of the channels that we work in. And not just doing 6 months ahead, but 12, 18 months, 24 months ahead in terms of what's a reasonable depletion value that we should be targeting and partnering with our distributors on. We then work back and say, okay, well, what does that mean in terms of inventory positions today and in the future and where do we want to manage those two. And ultimately, what we've seen given the current trends at the very top of the portfolio and some of the pricing challenges that we're facing into, we've made a call that we don't just want to be shipping more Grange from 707 to be building more inventory and ultimately putting more pressure on our partners who may then sell through at a lower price. So there's other parts of the portfolio. We've talked already today about Bin 389 and 407, which have got real momentum, very, very comfortable with our outlook for those 2 SKUs in particular. And then as we start really reading into the demand signals we're getting around wine and some of our entry-level bins, we're looking to ensure that we've got more available to meet those opportunities in China.

Another one over here.

Another question on the U.S. inventory. How granular is your visibility on the excess that exists? And I'm asking in particular with respect to vintage because then I guess what flows on to that, is that excess inventory being sold out on a first in, first out basis? Because we do not want to get into a situation where some of these distributors are sitting on inventory that is aging of wine that should not be aged. So I just want to get a sense of actually how cleanly can you see this and making sure that it's actually passing through.

Yes. I mean -- so again, I'll ask Ben, but I think we've -- obviously, through the review of trade inventory, we've got into detail, huge detail. So we understand by variant, by SKU, by brand, what is being held by our distributors, where it is and where there's anything at risk. I think the second part is that in our distributor contracts, there is parameters around what's salable and what's not salable. So it's in the distributors' best interest to ensure that there's appropriate rotation to ensure that, that unsalable piece of their inventory doesn't -- sorry, the salable piece of their inventory doesn't become unsalable because if it does, then they have to destroy it. So I would say that we've got real granular visibility of it, and that's allowed us to put plans around it to try and deplete it faster, so we reduce it. Ben, anything to add?

I think it's a very appropriate question and very appropriate for right now. But again, captured it really well. But as an example, with the transition to Reyes, we've mobilized teams to really assess all the quality of the inventory, the vintages, as you note, the salability and if it's unsalable,'s out of the system. So with what transpired in California, it enabled us to really build a rhythm with regards to the inventory we're holding, particularly as we go through a period of time here where we're bringing inventory in line with depletions, that quality control is going to be essential.

Okay. And then just a quick one on -- great to see some market share data across different markets, and it looks good in every market, except for the U.S., including within luxury. So I know there's obviously been a lot of change going on with the distributors, et cetera. So is there -- can you point out someone who is actually winning the share? Or is this a situation there's a bit of a fragmentation that's going on, and there's a bunch of players have lost share towards the top. I just want to -- I don't get to see that data, so I'd love to hear your view.

Sure. So look, with regards to -- I'll just take the last 5 months as an example. And I look at -- as we look at category and we look at 20 and above, which is really where DAOU and our luxury portfolio sits, we are taking share. And that's total depletion, not just the Circana channel, which I know, as you mentioned, Nielsen and Circana is highly visible. But with regards to our distribution broadly and as we think about market gains and category beating gains, look, there is compression in the market right now around price. And we are holding a firm line with regards to the positioning of our brands. There's not one standout brand or competitor who's sitting there that we look at and say, okay, well, what are they doing? I think it's across the category. But pricing management for us as we think about market share category gains as a really important part of the mix. But I will say the momentum we've seen in the last 4, 5 months from where I sit, and that's across our luxury portfolio and mature has been pleasing, and it's ahead of market.

Ben from Jarden. Maybe just another one just on China to you, Jack, around like I appreciate that parallel was a challenge. So parallel importing has been a big issue. But obviously, a lot of stuff you guys did around bundling caused some real angst in market as well and distributors are taking on a whole bunch of inventory they didn't want and we're just clearing and sizing price. Is that a practice that you're stopping that unprofitable or volume-driven bundling now? And then where I'm leading with it is, is the profitability for your distributors going to improve materially in market for China? And if they're making more money, is this going to provide an opportunity for you to sell more product in, they're going to be more aligned to push your product harder over competing?

I think you've almost answered your question.

Well, I'm just trying to it's around bundling because we've heard for years you do it when we heard all the time from distributors that you were and they were doing ridiculous practices because they wanted to make margin, but they're putting a ridiculous price and everything else. Is this going to position Penfolds a lot better to get better, more profitable volume in market now? So I'm trying to understand.

Yes. The simple answer is yes. It's a different approach to how we go to market, how we work with our distributors. Look, an example of that is what I talked to earlier about Grange and 707, right? We want to be ensuring that our partners are all working on parts of the portfolio that are moving for them, that are generating cash flow and ultimately generating profit. Maybe in previous years, there's been parts of the portfolio where they're taking a loss to move through inventory. That's what we're trying to get away from, right? It doesn't help us as the brand owner, doesn't help others in the market, certainly doesn't help the distributor. So as we think about bringing the portfolio back together and the TWE portfolio now and the excitement that we've got and the people in the market have got around the likes of Matua and Squealing Pig, we're not going to be sitting there and saying this is a -- you have to take this. We're going to be building the brand at the consumer level, building the demand and then working with the right partners to ensure we're servicing that demand.

Just to build a little bit. I think, first of all, like Tom mentioned, that's definitely not our intention to buy, right? And that's very clear. Yes, we did have some distributors, which is back to my slide talking about the discipline because of the distributor limitation, right, because of the capability gap they might have some dispute have the wrong behavior, which is coming back to the -- talking about the discipline, the data, so which is in the past 12 months, we've built a lot of data system, tracing that. And we're holding the distributor accountable. You think about the next 5 years, we are continuing to expand our distribution. We continue to have more data to impact to make sure we get a problem earlier. And then after that, what we're going to do is, one, we are going to make sure we get the right allocation by geography, by customer. But also in the meantime, we need to make sure the distributor have the right capability to drive the distribution in the market. You kind of do in a comprehensive way. And this is what we are doing right now. And so that's why you probably hear some noise. Yes, we knew that, but we are correct that very, very immediately.

Sorry, final one for me. So the distributors in China that you're dealing with your 20-odd Tier 1 distributors, are they also distributing Baijiu product and others as well? And is this going to make them want to lean more into prioritizing Penfolds so you can try and displace other products in range? Is this going to help accelerate that process, too?

It depends on the region. If you ask me about do I need a customer to really distribute Penfold, I say yes, because it's 100% focused. However, in some regions, how can you get to that distributor network? If you only have a Penfold, but there's a bunch of the liquid store, they run the whole product. That's why in some region, we work with some of the big Baijiu distributors. And this is back to my previous conversation is why we -- why we have this opportunity, why we see this opportunity because we see in that Baijiu distributor network, there's a lot of the liquid store, they're looking for Penfold because the product didn't make money from the Baijiu perspective. They're looking at something even better. I think that it's kind of it's subject to kind of region and you need to go to the region by region. But we don't have a kind of uniform kind of strategy. We kind of just justify in some region, this distributor is solely selling Penfold, but in some region, it might be Baijiu. In some region, it might be Baijiu plus beer. It's quite different.

But I think as a trend, we are absolutely seeing more distributors who've historically been focused on Baijiu coming into our network through the Tier 2 network.

Phil Kimber again. Just a question, and it's a bit conceptual, but there's been a lot of questions on inventory and distributors in the U.S. in particular. There are certain states where you can go direct. Why don't you do that? That would get rid of a lot of these issues. Is it a scale issue? Is it a brand strength issue? What conceptually holds you back there?

Yes. There are some states, but they are relatively few. Obviously, there's some -- California is one. And in order to set up your sole distributor for a portfolio of brands in a state as large as California is a really significant investment. And to get the kind of reach that you get with a distributor is really, really challenging. So I think for us, it's more about saying, "Okay, if those opportunities arise, we'll assess them." But how do we get disproportionate attention through the people that we've got on the ground through joint business planning, through working with distributors to access the universe that we would like with our brands as being a much, much more efficient method of trying to bridge all of the distribution points we need in a state like California. I don't think we're ruling it out. We would assess it state by state, but that's the model that we're implementing at the moment, probably because of its efficiency in relation to what we need to do to get to the accounts that we need to access. But I think the question is right because there's so many brands competing for the attention of distributors and the distributor landscape is shrinking. So if anything, that's growing. But for us, the focus is on trying to ensure that we've got a relationship, a depth of business understanding with each other that allows us to still get to the same outcome.

Yes. I'll just build one point to that. So we've undertaken a pretty much a forensic view of the marketplace in terms of distribution. So not all points of distribution are created equal, and particularly when you consider the makeup of our portfolio. So as we think about the opportunity moving forward, and I showed it on in my presentation, where we've been focused around distribution has been around the quality of that distribution. And so exactly as Sam said, holding ourselves accountable, first and foremost, in terms of how we see growing our brands, but then also jointly holding ourselves accountable with our distributors, exactly as Sam said, which is it's a pinpoint exercise around where are we and where are we not? Where should we be? And then how do we get after that business. And I think that irrespective of the market, irrespective of if we can go direct or through a distributor, the prize is still the same, which is let's get in the accounts that we need to be in.

We're going to break to lunch now.

I think that's lunch time. Thank you [Break]

And good afternoon, everyone. I'm Kerrin Petty, Chief Supply and Sustainability Officer at TWE. I've been part of the supply network for 24 years, and more recently, the Americas has also become a part of my portfolio. Today, I'll share how we're transforming our supply chain as we build the future of TWE. My team of around 1,000 people are all deeply passionate about the art and science of wire making. They're in vineyards, wineries and production sites across both hemispheres. Many of them have been with us for decades, and firmly part of regional communities where we operate. And in Adelaide, we're on based, our brands have been part of the state's wine story for more than a century. A lot has changed in wine started at our Penfolds Collection vineyard, but the one thing we've always done in supply is adapt to the consumer and the market. I'll speak about that today as I cover a few key areas. The first the history of our supplier model; and second, the significant transformation ahead to future-proofed supply. Global supply is aligning with our broader Ascent program, and accelerating the changes we've been working on for some time. Ultimately, it's about supporting 3 of the future, which means lining up behind the power brands and regional heroes and shoring up our supply of luxury wine for the long term. The work under Ascent has 3 objectives: to align supply and demand to minimize the synergies as we optimize our supply model and to release capital from noncore assets, which deliver benefits over the short and long term. At the same time, we will continue to future proof our supply chain through investment in innovation, technology and sustainability. To set the scene, our supply chain today is large and complex, especially in Australia and the U.S, partly because of our large portfolio of over 70 brands and also our acquisitions over the last few decades. Above all, our supply chain has always enabled our success, but it's become inefficient over time. To stay competitive, we did more than just incremental change we need a significant transformation so it's fit for purpose. It needs to align to our portfolio and also our growth plans. The transformation has 3 main priorities: the capacity of our winery and packaging centers, the quality of our assets and long-term lease arrangements to impact our flexibility. Our transformation isn't starting from scratch. We've been proactive about our supply chain, especially in the past few years as we've adjusted to our luxury portfolio and seen overall production volume decline. That's created meaningful benefit, especially in Australia. For example, even though we've had lower production volumes for premium and commercial wine, we've managed to reduce the cost per liter. And for luxury wine, we've scaled production that kept cost relatively stable. That's helped us maintain margins in the mid-40% range for Penfolds. We've also scaled up luxury cabinet sourcing to respond to demand to some of the most popular Penfolds Bins wines. So we're starting this transformation with a track record of knowing what to pursue and for which outcome. The next phase a transformation will be more acute,will line up behind our future portfolio and act decisively to a future fit. The transformation will be focused on 2 key geographies: the most substantial and time-sensitive changes are those in California where we'll reset the end-to-end supply chain to end up with a flexible model, address excess capacity and align supply and demand. And in Australia, we'll focus more on efficiency and a variable cost base. At the same time, we'll uplift quality and output for both France and China. I'll go through our transformation agenda for the 2 key markets in more detail shortly. But first, I'll give you some context on how we've approached our portfolio of vineyards. Our goal is always to maintain balance between supply and demand as our portfolio changes. We do that through sourcing, getting the right group of company vineyards, our grower network and the bulk wine market. At the same time, we need flexibility to respond to market conditions and consumer trends. This has worked well in Australia. Through grower arrangements and bulk wine sourcing, we've been able to meet growing demand in Penfolds in particular. So for our vineyards across Australia and New Zealand, we'll keep the best-performing sites with the highest grade luxury fruit. At the same time, we'll face out of our premium vineyard assets, and we've already exited almost all of our commercial assets Australia. This all reflects our transition to a global luxury wine company, a part we've been on for quite a few years. Turning now to California, where the underlying context is slightly different. As you've heard from Sam earlier. It's been heading towards the luxury portfolio for quite a while, and we've built a sizable footprint, especially on the North Coast. But over time, our assets, long leases and extended grow contracts have meant we don't have the flexibility to adapt to changes in demand. To restore balance between supply and demand, we'll focus on a few areas: reducing our grower network and following some of our vineyards scaling back our vineyard footprint materially reducing our owned and leased vineyards in Napa, Sonoma and the Central Coast and addressing capacity and utilization of our winery and packaging assets. As I mentioned, we'll move fast to address the imbalance by reducing production volume for transition brands, the ones that won't be part of our long-term future. We'll start to improve that straight away by reducing the volume of fruit coming into our network. And the full transformation will happen over the next few years. Our winery and packaging assets will also change over time. Saint Helena Winery will remain our main luxury production hub wineries in Paso Robles and Saint-Louis [indiscernible] will be closed and divested over the course of the next 12 months. And we'll downsize our Sonoma bottling center, reflecting lower volumes moving through. These are important changes that we are pursuing as we move to a more efficient production footprint and minimize the synergies. In summary, our changes to the California supply chain are extensive. -- doing that quickly and in a measured way, will create a right-sized, efficient and agile production base that was set the Americas region up for success. Most of Australia's transformation will happen in the short term with most of the work being completed by the end of F '28. There are 3 priorities: first, rightsizing our vineyard footprint, reducing our planted hectares by about 30%, mainly in South Australia, Victoria and Western Australia, including some vineyards and winery assets that are linked to brand. Second is our flagship winery and packaging center in the Barossa Valley. There are 2 main changes at this site, transforming the winery to a further shift in luxury production and with packaging will dialog innovation and automation, like robotics and giftpacking to help cater for occasion gifting. And finally, for warehousing and logistics, will consolidate most of our storage operations to our process. So our overarching objective is to minimize per unit COGS increase from a smaller production network in support of our ambition to expand EBIT margin to 25% and higher. Our approach is practical to create continuity and ultimately, a business that is simple and flexible. COGS per case will increase gradually while we make the changes we need to and recognizing inventory sell-through in the P&L. In Australia, we'll see material benefits over 1 to 3 years. But in the U.S., the material benefits and P&L impact will take longer to come through, especially for Vineyard and Winery initiatives. A couple of things come into play for that time line. Our inventory position and age of release of a luxury portfolio. As Sam mentioned in his opening, we're taking action to accelerate initiatives in California and bring forward the benefit realization. Our plans are broad and ambitious but they need to be, but they're also well considered as we shift to our new portfolio. Quality underpins what we do. It's a nonnegotiable for our luxury brands. And our plans will keep volumes stable for nonpriority bands that will need for some customers and some markets. While we've been rightsizing our assets, we've always been investing to make sure we're a future-fit. We've become industry leaders in automation, sustainability and innovation in formats, varietals and processing. I'll touch on a couple of specific ways we're improving efficiency and capability. Firstly, in winemaking, which is the part of the value chain that relies on why makes it clear and experience. We're carefully balancing human judgment with technology that can simplify the process. We're trialing AI to predict fermentation outcomes part of the process that impacts wine style and quality. AI is one of those inputs that's helping us consistently create better wine alongside our talented winemakers, and ultimately, stronger margin outcomes for the vintage process. Moving into the detail of one of our sustainability initiatives. On the bottom left of the slide, you'll also see a netted canopy over our prior [indiscernible] and the Barossa Valley. Many of you saw that when you came and visited. It went up in 2024. And since then, we've been analyzing the buy-ins under the canopy. How they use water differently and how we can protect from extreme weather events. The Canopy has already helped make the most of our resources, especially for inputs like water, which have become more scarce over time. And something to reinforce here, it's the important role of viticulture across our complete business. From our vineyards to the glass, sustainability is at the heart of everything we do. It's embedded across our operations in every region. Climate change is complicated and evolving. That's why we've been experimenting with industry first. But we know also we can't sell this alone, so we're sharing what we learn as we go. This aligns with our responsibility as an industry leader and one that we take seriously. While we're thinking about the moderation trend in consumers wanting more choice in the future, the climate will also shape the future of our vineyards and wineries. Our climate analysis is helping us understand how growing conditions are likely to change. and is informing some of our biggest decisions like sourcing, infrastructure, investing in vineyards and allocating assets. We're also innovating to make sure we can continue to grow luxury fruit as the climate changes. Our viticulture team has taken on this challenge working with scientists to breed buyers at a drought and milder resistant. The genetic material is from some of the oldest fines in Australia. We've planned our baby lines, which are naturally hearty and improve the sustainability of our vineyards. It's a long-term project that we'll be following closely because it's got big implications for the future of winemaking and as growing conditions change. We're also thinking about sustainability and a bigger scale at our wineries and packaging sites. In the Barossa Valley, we've made sustainability improvements for years has become a hub of sustainability, tech and innovation. To take it to the next stage, we've received funding from Australia's renewable energy agency for large-scale decarbonization. Through that project, we'll cut LPG and diesel use across the Barossa side. To support our net 0 ambition by 2030 for Scope 1 and Scope 2 emissions. This is a big milestone for our Barossa operations and our broader sustainability agenda. Today, I've covered our -- the reset of our supply chain fundamentals, but at the same time, how we're investing to grow. Two of the best examples are NoLo and our approach to sustainability. First, I'll turn to the NoLo alcohol wine. This category is where we see long-term potential. For the past few years, consumers have been moderating, especially in the U.S., Australia and the U.K. But we also know that flavor has been a barrier for low alcohol wine. We've accepted this challenge to craft the wine with less alcohol that takes as good as the full-strength version and we've invested in best-in-class technology to protect flavor and it's our winemakers control the end-to-end process. That means we can experiment to create lower alcohol wines that also taste grade. You can see how the process works on the screen. The shade a part is what the winemaker is called the Black Box. It's our proprietary process where we can manipulate essence of wine. Then we reintroduced it afterwards after the alcohol has been removed, and that's what gives us the edge to make next generation of no low wines, and we're seeing some really promising results. We've invested in equipment, but we've also invested in winemaking skills. Hopefully, some of you got to try it during the break and met the key winemaker [ Clear Drive ]. Clear's experience combined with our technology is producing some really impressive flavored wires and prices that are resonating in the refreshment category. We're pleased that this technology is also getting noticed. Earlier this month, it was recognized as the best tech in industry, food and beverage business awards, and we see a promising future for this growing part of the wine category. So to summarize, supply will be a simpler, more agile and more capital-efficient division that is aligned to the future of TWE. We'll support the growth of our focus brands, will invest in wines and categories that will deliver returns. Our large and diverse set of assets have been part of our success over many decades. What is time for now is rightsizing at pace to support the laser-focused portfolio we've announced today. We're condensing our footprint, and we're working our assets harder so they earn their place as drivers of growth. As I mentioned in my introduction, our supply division has been adapting to our business and consumers since I joined almost 25 years ago. Our quality assets in the best wine-growing regions guarantee our place at the home of luxury wine. This future state supply model will set us apart for decades ahead with stronger execution, improved margins and sustainable growth. Thank you, and I'll now hand over to Justin to take you through the financial outlook.

Good afternoon, everyone. I'm Justin Pipito and I'm TWE's Interim Chief Financial Officer. I've been with TWE for 10 years, most recently as Deputy CFO. And before that, for 3 years as CFO of our Penfolds division. My time with Penfold showed me what's possible with the right investment and execution behind our most important assets. And so the upweighted investment behind our key brands through Ascent and the potential it will unlock excites me. I'm also excited about how Sam will drive clarity and simplicity through our organization. In the world of finance, complexity slows down processes and makes it harder to find answers. I'd like to begin by taking a few minutes to bring together the key themes that you've heard today and how they impact our financial outlook. Across the presentation, we have outlined the key components of the Ascent program. Importantly, these initiatives are intended to progressively improve the quality and sustainability of earnings over time. while strengthening our balance sheet and enhancing returns. Near term, our focus is on implementing the important initiatives we announced in December, focused on ensuring the health of our brands and sales channels. This includes the continued rebalancing of customer inventory in both China and the United States alongside actions to improve channel health and operational execution. The EBIT expectation we've outlined today, F '26 in the range of $480 million to $490 million and F '27 EBIT to be at least equivalent to F '26 reflects our deliberate transition as we prioritize as we prioritize business reset over near-term earnings growth. For F '28, we expect to return to depletions-led revenue growth driven by key markets and our power brands and regional heroes. And while growth is expected to resume at this point, it is likely to be more gradual and disciplined, reflecting our focus on sustainable value creation. Over time, we see a strong pathway to improving profitability, with EBIT margins progressing to our long-term target of 25% plus. This is supported by improved portfolio mix, disciplined brand investment, supply chain transformation initiatives and the $100 million per annum reduction in operating costs. We also anticipate a corresponding improvement in return on capital. with earnings growth supported by more disciplined capital allocation and brand and asset rationalization, presenting an opportunity to reduce capital employed. As the time line on this slide shows, the delivery of these financial outcomes will occur progressively. Through F '26 and F '27, a period of operational reset and inventory rebalancing, while we continue to drive strong depletions growth. With the reorientation of the portfolio to continue through the next 5 years, the contribution of deprioritized brands will decrease to 10% of revenue by F '31. This portfolio transition will be carefully managed to balance the focus on power brands and regional heroes with a similarly managed transition to production scale. The financial benefits from the new operating model, driven by the ongoing focus on simplification and efficiency will progressively impact the P&L from F '27, reaching the full run rate of $100 million per annum by F '29. Efficiency initiatives across support functions will take place over a longer period, reflecting support required from technology and process enhancements to enable changes. Key supply chain transformation initiatives in Australia and the U.S. will take place from this fiscal year and through to F '29. However, P&L benefits will take time to be fully realized, reflecting elevated inventory levels in the Americas along with various ages of release of luxury wine. This is a multiyear transformation and execution discipline remains critical. We expect the number of one-off costs in relation to the Ascent program, totaling approximately $220 million to $260 million. The onetime costs cover program implementation costs including costs to transform to the new operating model, transformation office costs and additional investments in technology that accelerate capability and efficiency through the business. Supply chain transformation costs, including costs associated with reshaping the Barossa winery and consolidating production in the U.S. to Saint Helena Winery and downsizing of the Sonoma bottling center. These costs will be incurred over a number of years in line with transformation initiatives and accounting recognition criteria. In addition to onetime costs, a number of brand and noncore assets will be divested as part of the transformation. An update on material divestments will be provided as the program progresses, with noncash write-downs expected as assets have progressed to held for sale, reflecting current market conditions. We do, however, expect the overall Ascent program to be cash positive over time. particularly as divestment proceeds are realized. Finally, these estimated onetime costs do not include any future costs associated with accelerating actions to address the American supply chain challenges outlined by Sam earlier. In terms of long-term perspectives by division, I'll now spend some time highlighting the implication of Ascent for our brand divisions, our current segment structure and its relevance to our future operating model. Firstly, for Penfolds. We expect to sustain strong depletions growth across all markets, led by China, with Southeast Asia playing a strong supporting role. We expect the completion of customer inventory rebalancing in F '27, which will enable revenue to perform in line with depletions from F '28. The increased investment behind Power Brands will benefit Penfolds and support long-term growth across all markets. While COGS will increase due to lower network volumes, the impact of Penfolds is expected to be minimal, and we expect handfuls to retain its very strong margins well into the future. In our future operating model, Penfolds will play a meaningful role across all regions, particularly Greater China and emerging markets where today, it represents the majority of sales revenue. For Treasury Americas, we remain focused on driving depletions growth ahead of category for our key luxury brands in addition to mature. Customer inventory rebalancing will be progressed in F '28 and completed in -- sorry, F '27 completed in F '28. From which point, we expect to see top line performance better reflecting the strong consumer demand for our brands. Overall investment will increase slightly with upweighted investment on DAOU, partially funded by moderated investment on deprioritized brands. While we are taking immediate and decisive action to rightsize our supply chain, we will not reach full run rate benefit for longer than 5 years, which will mean COGS per case increases over the medium term. As Sam mentioned at the outset, we will continue to explore opportunities to accelerate transformation initiatives and improve this financial profile, including taking actions to restrict future vintage intakes. And finally, to Treasury Collective. While we expect to deliver depletions growth for our power brands and regional heroes, the ongoing reshaping of our portfolio and the deprioritizing of remaining brands, in particular, commercial brands, we see overall volumes continue to moderate. The careful transition of volume associated with these brands will be critical. Overall, A&P investment is expected to reduce driven by the portfolio evolution, while COGS per case will increase driven by lower volumes, partially offset by supply transformation benefits. In our future operating model, treasury collective brands will contribute meaningfully to Australia, Europe and the Americas P&L, driven by mature and our regional Hero portfolios. Across all divisions, overheads will be lower, reflecting the benefits of the new operating model and ongoing efficiency initiatives. We are focused on strengthening our balance sheet with a clear path to reduce leverage, which we expect to peak in F '26 at 2.9x before delevering to below our target 2x target level by the end of F '29. Leverage will be impacted positively by a return to EBIT growth from F '28, but more importantly, by a number of meaningful capital management initiatives. Those initiatives include the cash proceeds from sale of noncore assets, including brands, vineyards and other high assets, a rightsizing of our planned capital expenditure where we expect the go-forward investment to be lower than recent fiscal years, enabled by a well-invested asset base in addition to a reduction in our overall supply footprint and the continued suspension of dividends with the resumption to be considered as we trend towards or achieve our target level, leverage level. The combination of these factors provides us great confidence in our ability to retain the strength of our capital structure. In addition to this, we continue to endure strong support from our global lending group as reflected in the recent $300 million of new bank commitments to refinance upcoming debt maturities and strengthen our liquidity position, with liquidity expected to exceed $1 billion at the end of F '26. The Ascent program lays the foundations for TWE to deliver sustainable, high-quality earnings growth and consistent positive momentum in [ RAC ], increased A&P investment behind our power brands and regional heroes, supported by fee disciplined investment principles outlined earlier by Christy will drive positive portfolio mix and sustained revenue and revenue per case growth. As called out on this slide, our power brands already have strong depletions momentum. Over the 23 to 25 fiscal years, Penfolds depletions grew 12% on a CAGR basis. [ The 6% ] and mature 3%. With ongoing up-weighted investment, we expect this momentum to continue and accelerate. Revenue growth will be supported by transformation initiatives through the supply network as outlined by Kerrin. These initiatives will start immediately, however, take a number of years to be fully executed and given age release positively impact the P&L from F '28 forward. Finally, a more efficient nimble cost base with targeted savings of $100 million per annum achieved from F '29 will ensure revenue growth will be leveraged through the P&L and translate to EBITS growth and EBITS margin expansion. This ongoing margin expansion will, in turn, enable ongoing higher investment behind brands and the cycle continues. At the same time, the disciplined execution of a number of meaningful capital management initiatives, including ongoing reduced capital expenditure and sale of noncore assets will significantly reduce our capital base, enabling us to sustainably grow ROCE. In summary, the Ascent program represents a structured transition for TWE. In the near term, the focus is on stabilization and reset. Over the medium term, we expect to return to top line and earnings growth. And over the long term, an improvement in margins and returns as just outlined. We are confident the Ascent program positions TWE to deliver more consistent and higher-quality financial outcomes over time. Thank you. We'll now move to our final bracket of Q&A, and I'll ask Sam and Kerrin to join me on stage.

It's Tom from Barrenjoey again. Just used on the U.S. got contracts. How long do those contracts run for? And with this restructuring that you've taken, like how much have you reduced your obligation there? Like if you were at $100, like did it come down in half or is down $70 or &80? I just know that's been a bit of a challenge for you kind of reducing the intake.

Yes, I mean the first part of the question, how long are they varies depending on what it is. I mean we've gone through a period of getting access to luxury cabinet, particularly and I'll talk specifically about the Napa Valley security of supply was one thing that was obviously very important to grow. So a lot of longer-term contracts we're written through those periods. We're coming off the back of some of those. So I suppose what we're looking forward to is sort of winding those down and getting more flexibility back into the supply chain, which kind of models what we've done in Australia over time, as on having conversations in the break around what we managed to achieve through the China period of turning off how we round things down, then we're able to produce the 2 biggest vintage went China reopened. That's the same flexibility where aiming for in the U.S. market. It's going to take a little bit of time to work through as we've obviously presented, but that's certainly the name of the game. In terms of materiality and numbers, I don't have an exact number. Just share, I don't know, [indiscernible], if you've got to answer that, but [indiscernible], that's the idea of what we're doing.

And then secondly, just on cash conversion. So obviously, the customer has been pretty awful in August. When does it get to the point where the cash conversion will be over 100% as you kind of reduce your inventory that you've obviously built up over the last few years?

I think cash conversion is clearly a focus for us as we look to drive our leverage back to where we needed to be. So a massive difference in how we think about how we generate cash inside the business. But JP, maybe you could give us a little bit more color on.

Yes. I mean I think the way I'd answer that, Tom, the modeling we've done, we sort of -- we net invest cash into inventory again next year, and that starts to balance that in '28, then from '29 onwards we start to sort of turn that cycle around. So yes, at least a couple more years.

It's Ben from Jarden. Can I just follow on from Tom's question just around the working capital. So there's a net investment, but you've also had to take a whole bunch of inventory in the U.S. on effectively retail price, right? So is it going to be a net negative working capital outcome overall for fiscal '27 still? Is that what you're saying?

Sorry, what was the second part of that?

With the inventory that you've taken on back on RMBC in California. My understanding is you've taken that back on effectively at a full retail price because you bought it back in the [indiscernible].

At a sales price.

Yes. So it's going to come on at a higher value, which is a big number, including the wind down of that plus what you're talking around Tom's are, is it still a net negative working capital outcome for '27. Is that what you're saying?

I mean the dynamics you're describing are the right ones. I don't have exactly the working capital partly. But I think it's safe to sort of conclude that. it would be a net negative working capital impact next year.

Okay. And just a second one for me. Just around the assets that you're looking to sell. What sort of quantum like -- I appreciate we're not at year-end yet, but what sort of quantum should we be thinking around assets held for sale that's going to come into balance sheet? Are we talking tens of millions or hundreds of millions. And what's your confidence or interest level against this backdrop we're seeing global? We want to actually get some of those away in the next 12 months?

Yes, I think we've been pragmatic in relation to the backdrop. So we've given ourselves an appropriate amount of time to engage with prospective buyers and realize as much value as we would expect. So we haven't put that into a very short period of time, which is unrealistic given the market conditions. I think it's -- we've had a look at all of the assets that we've got and we've got through that period of time. I think realistic expectations on what they're going to contribute. We're not going to share those numbers because we obviously haven't realized them. But they're one component of many components that we're going to execute in order to reduce leverage. So we've been very realistic in both time and expectation around value.

Sorry, final. But just to be clear, just to confirm the comment before that in the absence of any asset sales, you're still confident getting that leverage ratio up to by fiscal '28?

Yes. That's correct.

Bryan Raymond, JPMorgan. Just trying to get my head around the sort of the supply chain benefits supply chain transformation benefits longer term, 5-year program. And wrapping in that cash flow positive comment around the cash costs and investments. You've mentioned you're pretty conservative on what you're assuming for proceeds from asset sales, which is good. So you've got $75 million to $95 million cash cost sitting in the supply chain pay. So I just wanted to get a feel if that's a good proxy for what in terms of benefits, given you've got the $100 million sitting in the broader cost out. Am I thinking about that poll conceptually accurately is the first thing because there's a lot of numbers and components moving around.

Yes. I wouldn't be thinking about that number as an annualized benefit. That's some of those costs. I mean you're just dealing with the cash cost than you probably -- it's a close proxy, but it depends very much on how it flows into the into inventory and then how that inventory is going to pull through the P&L. So at a point in time, it will be correlated, but it takes a number of years to get there.

Okay. Maybe I'll ask differently. Is the supply chain benefits sitting in the $100 million program? Or is there incremental supply chain benefits as you realize this over a longer duration over and above $100 million?

Over and above $100 million. Yes. So the $100 million we talked about today is overhead efficiency largely around the new operating model and other initiatives that we have through the business. The initiatives Kerrin talked about impact the comp line, and that is separate to the $100 million.

Okay. And fair to say the U.S. is going to be challenged for a few years just on the COGS line. The benefits really come through. Is that based on the grower contracts you've addressed earlier and some of the existing assets, that's like 3 years plus, is it just to confirm in the U.S. So we could start seeing inflection in gross margin there?

I think it's over a number of years as we look at doing all of the actions that Kerrin talked into. And I think importantly, the strategic options we're looking at involve further actions in relation to supply chain and how we might accelerate that further actions in operating model and then other sale of potential assets in the region. So we've got that built in over a number of years, but we haven't built in any outcomes from the strategic review that might improve that outlook.

Caleb from Macquarie here again. Just a question on sort of leverage and I appreciate sort of calling out close to 3x or can you get it back to 2. Has there been any sort of updated thoughts on where you'd be company looking to run that just given sort of the journey we've had over the past 6 to 12 months? Would the preference be to continue to sort of get a close back down to the 1.5x.? And as part of that as well, has there been any change to the 3.5x that you had previously called out in terms of flexibility for strategic initiatives, I think the wording was?

Yes. I mean, Caleb, I think the immediate focus is getting it back to 2x. Whether we want to take another look at whether 1.5 to 2x is still the right range for the business going forward as we continue through the set transformation. We haven't really prosecuted that too much.

Might be good early. And just a second question for me. Just on the A&P spend. So I appreciate you're obviously looking to step that up, obviously still needs to be sort of spent effectively. So yes, I just wanted to sort of get your view on what the buckets have been in terms of the sort of 8.5% that you're spending at the moment and any sort of changes that would need to happen from a competitional point of view as you look to obviously deploy a fair amount more capital in that A&P spend?

Yes. We talked a little bit about that earlier. I mean, I think there is significant opportunity, particularly behind the priority brands that we've identified to increased investment to drive the growth and the role they're going to play in that portfolio going forward. So the investment is critical. I think where we're investing at the moment is varied, as you would imagine, across geographies and changes. Clearly, a lot of that is above the line spend. Some of it's in market spend. Some of it's nonworking media as we develop content to put out into different markets. So we have got quite rigorous return on investment analysis to ensure we understand very clearly what we've delivered from that spend. And I think Christy outlined that we want to make that even more rigorous by using AI and technology enablement to really understand where we create the biggest impact from the spend. I think we marry that in different markets with different opportunities. And again, that will depict kind of exactly how we deploy that increased investment. I talked about India, some of the horsepower we get from that investment allows us to look at some of the big opportunities outside of core markets. And I think, again, they represent really significant opportunities.

Shaun Cousins, UBS. Just regarding the management team, I think you've got a finance -- a CFO and a head of people head of [indiscernible] sort of around the timing on when we should see -- anticipate those roles being filled, please?

Yes. I think the processes are running, Shaun. We'll continue to update you as we identify the people that are going to go into those positions. So I would say it's work in progress, and I'll come back to you as soon as that's been done and obviously, the market. I just want to say, though, don't underestimate the cultural shift that we're looking at inside the business. the transparency that we're able to access in relation to performance. And then what conversation that transparency drives in the marketplace. So expectations have changed. We lifted the bar. We're focusing on clarity of execution in market, and there's a performance expectation that comes with that, which drives a different conversation in this business that's ever been received before. So I wouldn't expect that this is the end, as we look at the operating model, I would expect that this is the start.

Great. That's very clear. Maybe just 2 housekeeping financial questions. Just the effective tax rate on some of the costs that you've got on Slide 103. Just there, I think you might have mentioned play at the start that maybe not all of the tax effective. Maybe you could just give us an idea of what that is and my other question is just around your CapEx sort of guidance. Historically, you've been around $100 million maintenance CapEx around that level and $50 million growth. Just one of the areas you want to improve this view just CapEx, what should we be anticipating for CapEx in coming years, please?

Yes. Maybe to start with the CapEx line, you're right. So we've typically guided to $100 million mine and $50 million of growth. Over the long term, we see that reducing by at least 1/3. As I mentioned, our well invested capital base at the moment and the shrinking supply network are really the 2 things that enable that. Over the next couple of years, we're going a little bit harder than that, so more like cash as a number, typically, really to get a bit of momentum behind this leverage or delevering of the business. Then what would -- sorry, remind me.

Sorry, just within your one-off costs, the $220 million to $260 million, I think you highlighted in an earlier answer that not all that's going to be fully tax affected or if you just the pretax numbers? Sorry, pardon me, what would as they have a full tax rate? Or will they be -- we look for an after-tax number.

We're just assuring they've got a full tax rate.

This might be more for you, Sam. Just the company has had a long history of focusing on EBIT margin. It's a maximum bank dollars not percent. Why is there still focus on EBIT margin target?

I think it's just one of many measures. When we talk about transparency and measures that we're putting into the business to drive accountability I think it starts with brands and customers and market share and depletion and inventory. There's just going to be a suite of measures that we're going to apply to measuring how we're performing in the marketplace. So some of that is going to drive EBIT. Some of that's going to drive NSR growth positive gearing through the P&L, we'll be measuring A&P spend and other commercial spend inside of the business. So whilst EBIT still remains an important measure for us, it's not the only measure that we'll be using to understand how we're performing as a business.

Because the question that's left unanswered deliberately is the potential for reductions in volumes across the rest of the portfolio outside of the top 10. how should we interpret the calibration of that if it's the right thing to reduce that volume, do you do it or you're trying to balance a revenue outcome over the next couple of years?

I think there's several considerations with that. We've got customer commitments in markets that we need to be respectful of. We've got a supply chain transition that we're working through, so some of that volume is important for that. So I think it's done in a very considered and precise way over a period of time to balance the puts and takes so we can protect, if you like, the financial health of the business as we go through that transition. So yes, that's really how we're managing it. And I think we've got lots of confidence around that approach.

Michael Simotas from Jefferies. I look back on Slide 38, you've called out a large number of metrics that you'll use to measure the business. What are the key metrics that management will focus on delivering seems to be an emphasis on return on capital EBIT. Is that what will drive the business? Or will you be focused on sort of softer metrics like market share, depletions, et cetera?

Kind of all of the above. I think return on capital is a key metric. Our EBIT growth and margin is a key metric. Gross margin is a key metric because that tells us how efficiently we're running our supply chain. And I think in-market measures are also important so that we understand how we're executing and whether or not we're winning or losing. So whether that's market share depletions growth, trade inventory, share of shelf, distribution gains, there's a suite that we will use to understand the performance of our businesses and the performance of our plans in market, coupled with some financial measures, which again will give us an indication as to how that's translating into financial impact in the business. So I think they're all important. They've all got different roles to play in different parts of the business.

Okay. And then a second question on supply chain. Once you're through the supply chain changes and you've divested the assets that you want to divest, what sort of utilization will your win reason packaging facilities be running at?

I know what I would like it to be, Kerrin, but I suspect it will be better placed to answer that.

I think that approaching full capacity with this flexibility of what we will then extend into is more of the grower, bulk line will variabilize out our premium and commercial volumes as well. So we sort of got a few things happening at once that will make sure that utilization is where it needs to be. Maybe the exception might be the Barossa winery, which is quite a large winery and we're going to be growing to get into the size of that thing, but that's the intention for sure. Thank you.

Okay. Well, thanks very much for hanging in there on what's been a long and engaging day, but we very much appreciate it. In closing today, we shared our future vision for Treasury Wine Estates and the clear deliberate actions we are taking to realize it. We are building a business that is more focused, concentrating on our highest potential brands in segments and markets where we have a clear right to win. Simpler and more agile with an operating model that enables stronger execution and clearer accountability. Fit for the future, underpinned by an agile supply chain aligned to our future state portfolio. and financially stronger, a business that will be known for delivering consistent high-quality financial returns. This is a significant multiyear transformation that will progressively reshape TWE. We are addressing the underlying structural issues that have historically held the business back with discipline and a clear intent to leave no stone unturned. A great deal has been achieved over the past 6 months to bring us to today, and we remain firmly focused on the priorities ahead. I am confident that as we complete this transformation, will emerge as a significantly different and stronger business. Thanks so much for your time today and for your engagement. I very much look forward to updating you with regular updates on this journey as we go forward. Thanks very much.