(SMH) -

Treasury Wine Estates will shut down its Ryecroft winery in the McLaren Vale wine region in South Australia as part of a cost-cutting drive. There are 33 people employed at the facility.

Treasury will transfer production of wine from the Ryecroft facility, which has a history stretching back more than 120 years, to other wineries in South Australia in time for the 2015 grape harvest. It had been the main facility for the production of Rosemount wines, and that work will be transferred to other sites.

Company executives informed staff at the winery on Monday morning. Meetings are being held with unions.

It is part of Treasury chief executive Mike Clarke's overhaul of the business, as he cuts costs in the supply chain and steps up investment in the more prominent wine brands in the company's portfolio.

Treasury's director of wine production in Australasia, Peter Taylor, said the decision was a hard one to make.

"The decision to stop operating Ryecroft winery was an extremely difficult one," he said.

He said Ryecroft had been operating at about half of its production capacity for several years. In the past few years it had been the primary facility for the production of Rosemount wines. Mr Taylor said the production economics were not sustainable.

"Rosemount wines previously made at Ryecroft will continue to source their fruit from McLaren Vales and surrounding regions, the only change is the location where the wine will be made," Mr Taylor said.

Treasury, which also makes Penfolds, Wolf Blass, Seppelt, Lindemans and Saltram, has a portfolio of 83 brands. It had two separate private equity firms doing due diligence on its operations as part of a potential $3.1 billion buyout, but the board terminated talks with them after it became clear the price they were prepared to pay wasn't high enough.