AUS/US: Treasury Wine Estates writedown "frustrating" - regional head
TWE released its FY results yesterday
Treasury Wine Estate's costly inventory writedown in the US is “frustrating”, a regional head of the company has admitted to just-drinks.
However, TWE's MD for Europe, Middle East and Africa, Andrew Carter, said the company has taken “the right and brave decision” to destroy out-of-date stock after over-ambitious forecasts for new products. The AUD154.7m (US$139.7m) writedown pushed TWE's full-profits, released yesterday, down by 53%.
“When you have old and aged wine in a distributor network, you have to tackle that. You can't build brands with old-aged wine,” Carter said in an interview with just-drinks.
He added: “It's frustrating for all of us... The Americas challenges are well documented - they go back over a period of time and I think we've taken the right and brave decision to address and issue that has been there for a while.”
TWE announced in July it will clear “excess, aged and deteriorating” stock in the US.
Carter yesterday also said TWE has seen some signs of a wine slowdown in China because of gifting restrictions that have already hit spirits sales. But he added that Asia's FY performance was still strong, with a 20% volumes lift driven by “unprecedented levels of demand” (volumes +39%) for Penfolds in Hong Kong & China.
Strong UK sales at the end of the financial year (volumes +14%), along with the start of a recovery in Nordic countries, have also given Carter confidence for Europe going forward, he said.
With recent claims that China has become the world's biggest consumer of red wine, Chris Losh considers what wine producers can learn from the current travails facing international spirits companies i...
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