Clarke will start at the end of March

Clarke will start at the end of March

Treasury Wine Estates has defended its decision to appoint a CEO with no alcohol retail experience, saying new head Michael Clarke is a “heavy hitter” with a proven track record.

In a call with journalists after first-half results were announced yesterday (20 February), TWE chairman Paul Rayner conceded that Clarke had not worked in the wine trade previously, but flagged that he “has worked at a very senior level” in “complex” businesses. Clarke, whose appointment was confirmed yesterday, spent 12 years with the Coca-Cola Co and headed up Kraft Foods' European business.

He replaces David Dearie, who left TWE in September, and will start on 31 March.

Rayner said: “We did have a couple of candidates on the short list that had wine experience, but in terms of their track record and in terms of their ability we thought ... that Mike was very clearly the appropriate guy.”

Rayner also said the appointment will be long-term, and that Clarke plans to move his family from London to Sydney, where TWE is headquartered. 

“He is committed to the growth prospects of this company and he is committed to the long-term prospects of this company,” Rayner said.

In an another call yesterday, analysts attacked Clarke's lack of experience, with one saying his previous employer Kraft “isn’t exactly an agricultural producer, it doesn’t exactly milk cows”, according to Australian industry website The Shout.

Rayner said: “Treasury Wines ... has been run by wine people for 12 to 15 years. You draw your own conclusions as to how much success they've had. I think people would say it hasn't been that great.”

In first-half results, TWE announced a 37.6% drop in reported first-half earnings before interest, tax, SAGRA, and material items (EBITS), as sales came in flat. However, the company's net profits jumped, thanks to a tax benefit. 

TWE has struggled after a AUD160m (US$145.7m) stock writedown in the US last year. The company flagged up the writedown in its announcement around Dearie’s departure.  

Defending himself from analysts' criticism, including suggestions he should be removed from the board, Rayner said: “I think the board has acted very appropriately over the last 12 months. We had some challenges and we dealt with them.”