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‘A lot needs to be fixed,’ says new Treasury Wine Estates chief

There is speculation that Treasury Wine Estates may announce job losses after the Penfolds producer's new chief executive said he is planning 'structural changes'.

In his first formal address to investors and the media since taking the helm at Treasury, Michael Clarke (pictured) said he sees the need for ‘structural changes’ to the firm’s cost base, brand hierarchy and general infrastructure.

‘There is a lot that needs to be fixed,’ he said, at times citing his past efforts to reform Kraft Foods in Europe.

His comments have sparked speculation about possible job losses at the Australian wine firm, which has seen profits eroded by excess supplies of wine in the US, and more recently weaker consumer demand for fine wine in China.

Clarke declined to go into specifics, but he did hint that some of Treasury’s 83 wine brands could be dropped or sold off.

‘I think we do have too many brands in our portfolio,’ he said. ‘We need to make sure top-end brands get the lion-sized chunk of consumer marketing spend.’ Alongside Penfolds, some of Treasury’s best-known brands include Wolf Blass, Lindeman’s and Rosemount Estate.

Asked whether there is too much emotional attachment to brands in the wine trade, Clarke replied, ‘I can assure you that I’m not emotionally attached to any part of a business or particular brands.’ He added, ‘Where it’s needed and I have to be cold with an asset, I will be cold.’

Long-standing wine industry analyst David Errington again asked whether Treasury might cast aside its US business, and added that – given the unacceptable financial returns – he sometimes questioned whether the board only keeps it to allow trips overseas.

But, Clarke appeared committed to Treasury’s presence in the US in some form.

‘Everything is on the table, [but] I was in the US 10 days ago and I spent three days in planning. I clearly have a US business to run and I came out of those sessions really enthused.’

Written by Chris Mercer

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