News: TWE UPDATE 1-Treasury Wine to close commercial winery Karadoc by mid-2024 on tumbling demand

(Adds details on divestment in paragraphs 2-4, share movement in paragraph 5; strategy change in paragraph 6 & 7; earnings guidance in paragraph 9)

July 5 (Reuters) - Australia's Treasury Wine Estates (TWE) said on Wednesday it would be closing its commercial winery, Karadoc, in northwest Victoria by mid-2024, hit by falling consumption levels for its commercial-grade wine and rising input costs.

The country's biggest winemaker expected commercial volumes at Karadoc to continue to decline, it said in a statement, adding that with 70% of costs at Karadoc being fixed, lower volumes would mean higher running costs.

Treasury Wine Estates was one of the worst-affected companies when China imposed huge tariffs on Australian wine a few years ago, amid a broader trade dispute between the two countries.

The company said that about 60 team members would be impacted by the Karadoc closure decision.

Shares of the company rose as much as 0.2% to A$11.24 a piece in early trade, outperforming the benchmark index (xjo) trading down 0.2%.

Further to its strategy overhaul since the China setback, the company said it also planned to divest its commercial vineyards in Lake Cullulleraine, Victoria and Yankabilly in New South Wales.

The owner of the Penfolds label has been re-calibrating its business strategy in the last few years, moving away from low-margin "commercial" wine towards higher-end, more profitable products.

Commercial wines are usually produced in larger quantities and sold at a lower price.

Treasury Wine Estates said in May it expected a rise in fiscal 2023 earnings before interest, tax, SGARA (self-generating and regenerating assets) and material items to between A$580 million and A$590 million ($388.31 million and $395.01 million) from A$523.7 million a year ago.

($1 = 1.4937 Australian dollars)