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Treasury Wine CEO gets ousted from post; departure underscores need to market Australian wines differently

September 24, 2013 • News

The world’s second largest publicly traded winemaker Treasury Wine Estates Ltd. has announced on Monday that its Chief Executive Officer David Dearie was leaving the company effective immediately.

Image credit: Flickr user naotakem

Image credit: Flickr user naotakem

In a statement released on the company’s website Chairman Paul Reyner commended Dearie’s accomplishments in the last two years but says the Board believes TWE needs a leader with “stronger operational focus” moving forward.

“Over the last two years David has played a critical role in guiding TWE through its demerger and establishing the Company as a standalone business. He has also successfully built the profile of TWE’s iconic wine brands internationally,” Mr. Reyner said.

“However, following the write-down of excess US inventory announced on 15 July 2013, the Board has undertaken a review and concluded that now is the right time to look for a new CEO. In particular, having established a solid platform since demerger, the Board believes TWE needs a leader with a stronger operational focus to deliver the Company’s growth ambitions.”

Dearie’s departure from the company follows Chief Financial Officer Mark Fleming, who quit about six weeks before the company announced the U.S. writedown, according to a report from Bloomberg.

According to the report Dearie had tried to boost profit margins on labels such as Penfolds and Beringer by improving branding during the period when oversupply in the wine industry appeared to be declining. However that did not stop the writedowns on out-of-date inventory, which moved to destroy and discount bottles and pay out onerous grape-buying contracts.

Meanwhile according to Reuters, the ousting of Dearie highlighted the need for a change in the way Australia markets its wines internationally as the country’s exports fall.

Australia’s exports last year fell to A$1.8 billion from the peak of $3 billion in 2007, according to the Winemakers’ Federation of Australia (WFA).

“People are trading up,” said Mark Parer, a Beijing-based importer of Australian wines with Plantagenet Wines in the Reuters report. “The French are way ahead on marketing and branding.”

Australia has been known to produce cheap but decent quality wines. However consumers have begun moving toward higher-end brands, leaving the country with the challenging task of cutting oversupply, increasing prices and possibly even rebranding wines to suit the market’s taste.

Wine industry associations seem to recognize the urgent need to showcase Australian wines as premium products.

Last month the WFA proposed a $1.5 million food and wine centre to be built in Shanghai as part of a seven-point plan to reform the Australian wine industry. The centre would raise awareness of Australian wines in China, which is the fastest-growing wine market in the world, and give consumers access to premium food and wine tastings and educational materials and courses.

Meanwhile Tourism Australia’s latest marketing campaign aims to push Australia as a prime destination for food and wine, hoping to shift the foreign market’s perception. The organization has tapped the tourism industry, leading food and wine identities, and its marketing partner Wine Australia to incorporate the food and wine experience much more strongly in their global campaigns.

The Restaurant Australia campaign will now be part of Tourism Australia’s global campaign ‘There’s nothing like Australia’, and will be launched officially next year.

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