New chief to overhaul Treasury Wine Estate

The new chief executive of Treasury Wine Estates has no emotional attachment to any part of the business except for the top luxury brand – Penfolds.

Michael Clarke has spent his first week as head of the recently sputtering winemaker familiarising himself with operations in its biggest markets – the United States and Australia – and will soon start reviewing operations in Asia and Europe.

He says Treasury Wine has in recent years been marked by underperformance, poor execution, too much talk and not enough delivery.

“There is a lot that needs to be fixed,” Mr Clarke said in a briefing for investors on Tuesday.

All options will be investigated to improve shareholder value, including axing some of Treasury Wine’s 83 brands, he said.

The company’s portfolio includes Penfolds, Lindemans, Wolfblass, Rosemount Estate and Beringer.

Mr Clarke said Treasury Wine will spend more on marketing luxury and premium brands such as Penfolds; drop bottom-end wines where the only differentiating factor was low price; cut costs; reduce discounting; and review infrastructure and production capacity.

He noted that many people in the wine sector held emotional attachments to wine brands.

“I am not emotionally attached to any part of a business or any particular brands,” Mr Clarke said.

“I am looking at all the options.”

But he later made one exception.

“If I’m totally honest, I am emotional about Penfolds … That’s a gem that I think we’ve done a good job with, and I think we can do an even better job with Penfolds.

“If we can do something good with Penfolds, we can probably do something good with the rest of our portfolio in luxury and masstige (mass prestige wines).”

Mr Clarke said Treasury Wine was working hard to achieve its financial guidance for the full year despite challenging global markets.

In 2013, the company disposed of more than $35 million worth of excess or aged wine in the US, and offered major discounts on other wines, after oversupplying the market.

But there were no quick fixes.

The controversial move contributed to a $160 million hit to the company’s bottom line and ultimately led to the departure of chief executive David Dearie in September 2013.

Mr Clarke said Treasury Wine could improve its US business, with new management in place and a step-up in the marketing of luxury and mass prestige wines.

He was confident that the Chinese market would recover from austerity measures that had affected demand for luxury wine.

Also, there were opportunities in other Asian markets.

Mr Clarke, a former senior executive at Kraft Foods and Coca-Cola, took the helm at Treasury Wine on March 31.

Until recently, he was chief executive of the publicly-listed Premier Foods and led a significant turnaround of the company.

Treasury Wine shares gained 26 cents, or 7.2 per cent, to $3.87.

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