Treasury Wine Estates (ASX: TWE) has finalised a settlement agreement with Republic National Distributing Company (RNDC) following the distributor’s closure of California operations in September 2025. The Treasury Wine Estates RNDC settlement will result in a net cash outflow of approximately US$65m in 2H26, whilst allowing the company to regain control of inventory and remove a key operational uncertainty from its US business.
Treasury Wine Estates resolves California distribution dispute with RNDC
The settlement agreement addresses the disruption caused when RNDC exited the California market in September 2025. Under the terms, TWE will repurchase Treasury Americas and Treasury Collective portfolio inventory held by RNDC in California for its original sale value, net of a confidential settlement amount that compensates the wine producer for the impact of the closure.
The company disclosed that relative to the A$100m figure of Treasury Americas inventory held by RNDC in California (first disclosed on 13 October 2025), the net cash outflow accounts for remaining Treasury Collective inventory and reflects the benefit of the confidential settlement payment plus proceeds from inventory sales commencing in 2H26.
This resolution removes uncertainty from TWE’s US operations. The company has secured both compensation for the disruption and the ability to resell recovered inventory through alternative distribution channels in California, a strategically important market for premium wine sales.
What is a distributor settlement and why does it matter?
Wine producers rely on distributors to transport products from wineries to retail stores, restaurants, and hospitality venues. Distributors manage logistics, warehousing, and relationships with thousands of individual outlets across their territories. When a major distributor closes operations in a specific region, the producer faces two immediate challenges: recovering unsold inventory sitting in the distributor’s warehouses, and establishing new distribution partnerships to maintain market access.
TWE’s situation illustrates this dynamic. When RNDC exited California, the company needed to secure its stock and find alternative routes to market. Without a settlement, protracted legal disputes could have delayed inventory recovery and complicated efforts to establish replacement distribution. The agreement provides TWE with both financial compensation and operational certainty, enabling the company to resume normal commercial activities in California without prolonged legal proceedings.
1H26 earnings exceed guidance range
Despite the California disruption, TWE now expects 1H26 EBITS of approximately $236m, surpassing the $225-235m guidance range provided on 17 December 2025. The upgraded expectation (subject to finalisation of auditor review) demonstrates underlying business resilience across TWE’s portfolio, with the company scheduled to announce its 2026 interim results on 16 February 2026.
Sam Fischer, CEO
“Although RNDC’s decision to exit the Californian market had a significant impact on our performance in 1H26, we are pleased to have reached this resolution with RNDC, who remain a committed and high performing partner for TWE across a number of other US markets.”
The ability to exceed the top end of guidance whilst managing a significant operational disruption signals that TWE’s core business performance remained strong during the period. Investors can view this as evidence that the RNDC California exit, whilst material, did not fundamentally impair the company’s earnings capacity.
RNDC partnership continues across other US markets
The settlement relates specifically to California. TWE confirmed it will continue partnering with RNDC to distribute its portfolio across a number of other US markets, where the relationship has delivered positive results. Treasury Americas depletions in RNDC-distributed states grew 2.7% during 1H26.
The company expressed support for RNDC’s initiatives to strengthen its business model and capital structure, including:
- Planned divestment of several markets to Reyes Beverage Group
- Establishment of new financing arrangements
Following RNDC’s planned market divestitures to Reyes Beverage Group, RNDC distribution arrangements are expected to comprise less than 20% of Treasury Americas’ net sales revenue (NSR). This reduces TWE’s reliance on any single distributor whilst maintaining access to RNDC’s network in markets where the partnership continues to perform well.
The 2.7% depletion growth in RNDC states during a period of organisational change suggests underlying consumer demand for TWE’s brands remains healthy. Lower concentration risk improves the company’s operational resilience.
Inventory normalisation plan unchanged
TWE confirmed the California settlement does not alter its broader planned reduction of distributor inventory levels outside California. The company reiterated the approximately two-year timeline disclosed on 17 December 2025 for this inventory normalisation programme.
This strategic reset aims to optimise inventory levels across TWE’s US distribution network, improving working capital efficiency and reducing the risk of product age issues. Investors should note this is a separate initiative from the California settlement. The broader inventory normalisation remains on track with no change to the previously communicated timeframe.
Key dates for investors
- 16 February 2026 – 2026 interim results announcement
- 2H26 – Net cash outflow of approximately US$65m relating to settlement
- Approximately two years – Timeline for inventory normalisation outside California
The settlement quantifies a known issue, removes legal uncertainty, and positions TWE to move forward with normal commercial operations in California. Exceeding 1H26 earnings guidance during this period of disruption provides confidence in the underlying strength of the business, whilst the ongoing RNDC partnership in other markets demonstrates the relationship remains productive outside California.
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