A major South Australian winemaker has entered a reciprocal bottling agreement with Treasury Wine Estates following a decision to close its local bottling operations.

Accolade Wines, a producer of a well-known Australian brands including Hardys, Banrock Station and Leasingham, has signed a deal which will see its products in Australia packaged at Treasury’s Wolf Blass Winery in Nuriootpa. In return, Accolade will bottle for TWE in the UK.

The agreement follows the closure of Accolade’s Reynella packaging plant near Adelaide, with the loss of 175 jobs.

Accolade chief executive Troy Christensen said changing market dynamics had created a surplus Australian bottling capacity that was holding back the domestic wine industry. But he said the new agreement would improve efficiencies for both companies and secure economies of scale in each region.

“For a number of years we have researched alternatives to avoid outsourcing our Reynella bottling and distribution facility, including relocating assets within the business,” he said in a statement. “No other option delivered such long-term benefits.

“We were faced with the difficult realisation that the best option for our business, and for the Australian industry, was to ensure that the most efficient facilities were fully utilised – even if they were not our own.”

Accolade will partner with TWE in the UK where it will undertake all of TWE’s UK bottling. “This will move to Accolade Park in Bristol which will increase production there by 30%,” Christensen added.

The new bottling and packaging arrangements are set to complete by January.