Treasury Wine CEO to Leave After A$160 Million Writedown

(Bloomberg) - Treasury Wine Estates Ltd. (TWE), the world’s second-largest publicly traded wine maker, said Chief Executive Officer David Dearie will leave the company immediately after writedowns to destroy out-of-date inventory.

The company “needs a leader with a stronger operational focus to deliver the company’s growth ambitions,” Chairman Paul Rayner said in a regulatory statement today. Warwick Every-Burns, a director of Treasury Wine, will become interim CEO.

Dearie had tried to increase profit margins on labels including Penfolds and Beringer by improving branding at a time when years of oversupply in the global wine industry appeared to be ebbing, giving an opportunity to raise prices. That didn’t prevent A$160 million ($150 million) of writedowns announced July 15 to destroy stock, discount older bottles, and take charges for onerous grape-buying contracts.

“You can do what you want with Penfolds, but unless they can get the story straight on the commercial wines there’s just no way to make money,” Dan Hurren, an analyst at UBS AG in Sydney, said by phone. “Wine isn’t just about brands, it’s about managing costs through the entire range of products.”

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