(SMH) - One of the Californian wineries and brands which came into the Foster's Group stable after it shelled out a whopping $2.9 billion to buy the broader Beringer Wine Estates business in 2000 has been sold by Treasury Wine Estates at a loss of US$7.5 million, as chief executive Mike Clarke moves to re-shape the operations.

Treasury, the owner of Penfolds, Rosemount and Wolf Blass in Australia, on Tuesday announced that it had sold the Asti winery and the Souverain brand in the Sonoma County in California to the world's largest privately-owned wine group, E&J Gallo. It will book a pre-tax loss of US$7.5 million on the sale, which also includes some vineyards, because of the higher asset values at which the business were already sitting at in the Treasury accounts.

Treasury was split off into a separately-listed company on the stock exchange in 2011 when Foster's Group de-merged its beer and wine businesses and the new company started life with 83 wine brands around the world.

The United States wine operations have been a constant headache for Treasury and its predecessors for years, suffering heavy writedowns including a $160 million hit in 2013 which claimed the scalp of then chief executive David Dearie and forced the company into the embarrassing situation of announcing it would need to destroy 6 million bottles of wine in the warehouses of third party distributors as stock levels of cheap wine overflowed.

But the actual destruction was substantially less after Mr Clarke took over in March, 2014 and had a fresh look at the US situation, finding other avenues of depleting the stock and resulting in less than half of the 6 million bottles being crushed by steamrollers.

The financial performance of Treasury's US business improved in the first half of 2014-15 and will be closely watched again when Treasury announces its full-year results on August 19.

The Souverain brand in the US sells for between US$10 to $20 per bottle and was acquired by Beringer in 1986. 

Treasury also has a sale process running for three other wineries in Australia, T'Gallant on Victoria's Mornington Peninsula, Bailey's at Glenrowan in Victoria and the Ryecroft winery in the McLaren Vale region in South Australia.

E&J Gallo's senior vice president of Gallo's Premium Wine division, Roger Nabedian, said the Souverain brand had a long history and would fit well in the firm's premium wines portfolio and help it "keep pace with growing consumer demand worldwide" for premium wines.

The Asti winery will bolster Gallo's existing stable of wineries which encompass 12 different wineries in California and Washington.

Treasury will shift production of brands frm the Asti winery into two of its other wineries in California, the Beringer winery in the Napa Valley and a Paso Robles winery on the central coast of California.

Treasury shares have risen strongly this year from $4.60 in January to around $5.50 currently, with the falling Australian dollar a plus for the company and its exports at a rough rule of thumb of a $2 million injection for every 1 cent fall in the Australian dollar.