TWE chair says bad US wine would've destroyed the brand

(TheAustralian) - TREASURY Wine Estates chairman Paul Rayner has admitted the company could have avoided the $154.3 million provision it booked against its US business if it had better reporting systems in place.

“It’s unacceptable that we incurred this loss,” he said of the writedown, which dragged TWE’s annual net profit down by more than 50 per cent for the past financial year.

The provisions included $34m to be spent destroying up to 600,000 cases of old and unsold wine languishing on the shelves of US distributors, and a further $82.4m writedown on the value of bulk wine that will be flogged off at firesale prices.

Speaking at TWE’s annual general meeting in Adelaide today, Mr Rayner said while TWE’s inventory management systems allowed it to assess its own stock levels, it had no idea how much of its wine was sitting on the shelves of distributors – wine that was past its sell-by date and which would have “destroyed” TWE’s brands if sold to customers.

“The information was not available to us, but it now is,” Mr Rayner said,. “You could argue that it should have been, and I would agree with you if you argued that.”

The writedown led to the ousting of TWE chief executive David Dearie last month, a move Mr Rayner said was “not taken lightly, and was made because the board unanimously agreed that it was in the best long-term interests of TWE”.

TWE non-executive director Warwick Every-Burns has been appointed interim CEO while the company searches for a permanent replacement