Treasury Wine Estates (ASX:TWE) is facing elevated inventory levels due to long-term grape sourcing agreements combined with weaker-than-expected demand, according to a Monday Jefferies note.
Jefferies said that the US wine market is currently experiencing an oversupply and hence, the latest grape vintage needs to be relatively small to help rebalance the market.
According to the investment firm, the continued decline in crushed grape volumes should help ease the oversupply situation.
Jefferies kept a hold rating on Treasury Wines with a price target of AU$5.