TWE is among those suffering in China from new Government anti-corruption measures

TWE is among those suffering in China from new Government anti-corruption measures

Treasury Wine Estates (TWE) has become the latest drinks company to admit it is being affected by the Chinese Government's anti-extravagance crackdown.

In a brief trading update yesterday (22 October), released to coincide with the group's AGM, interim CEO Warwick Every-Burns said the company was facing challenges in the Asian market. “We are observing signs that consumer pull-through in China is softening as a result of the recent leadership change and well-documented Government austerity measures,” he said.

China's anti-extravagance clampdown, launched late last year, has also hampered spirits producers including Remy Cointreau, Pernod Ricard and Diageo.

TWE gave no further detail on China yesterday, but the company repeated its warning from earlier in the year, that fiscal 2014 will be “challenging” for the group. The on-going impact of a AUD160m (US$145.7m) writedown on US stock and a volatile Australian dollar were flagged as factors.

Meanwhile, chairman Paul Rayner warned yesterday that it “could take some time” to find a new permanent CEO, to replace David Dearie. He indicated that the “average time” to fill such a role is nine months. Every-Burns is not putting himself forward as a candidate for the permanent role, Rayner said. 

Dearie left the business last month with immediate effect, in the wake of the US stock writedown. Rayner reiterated yesterday that the decision to replace Dearie was "not taken lightly", but the board agreed it was in the "best long-term interests" of the company.