just on Call - Treasury Wine Estates boss talks up US opportunity after write-down plan

The head of Treasury Wine Estates has faced down criticism over the company's move to destroy AUD35m worth of old US stock, maintaining that the group has to maintain a presence in the world's biggest wine market.

In a conference call with analysts following today's announcement, CEO David Dearie said that the US is a “fantastic growth opportunity at the right price point”. It came after Merrill Lynch analyst David Errington probed Dearie on why the group does not sell-off its US assets. 

“Foster’s had this business for 13 years and in my recollection I can’t remember ever getting the US right,’’ said Errington. ‘‘I know you have taken the axe to it. But, my question is: You have cleaned the business out now, why not just sell it? You can't get this business right, why be there?"

But Dearie responded: “The US is the world's largest consumer of wine and ... it's growing at the more luxury price points, that's where the consumer is moving to,” he said. 

Dearie pointed out that the US wine market is expected to grow from 300m cases to 450m cases over the next ten years. “If we are going to be the most celebrated and successful wine company, we have to be in what is the largest (market) and which we believe is a growing opportunity.”

But, Errington flagged that the group has admitted it has made mistakes in the region. 

Dearie countered that, under the leadership of MD Sandra LeDrew, its Americas business had “seen real progress in the health of the brands”. “There's a new leadership team in place (in the US) and that is driving the business,” he added.

Earlier today, TWE said the move to adjust its US inventory is likely to cost the business AUD160m (US$145.7m) in pre-tax full-year profits.