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TWE boss bites back against small retailers
Treasury Wine Estates chief executive Michael Clarke has defended his strategy to turn around the fortunes of the Australian wine producer – a strategy that has met heavy criticism from independent retailers.
TWE chief executive Michael Clarke has said that indie retailers “get upset when they see someone activate an exclusive better” (Photo: TWEGlobal)
Boss Michael Clarke has been leading a high-profile campaign to increase sales and make the producer more attractive to potential buyers following the recent poor performance of the company.
However, the scuppering of takeover bids by worried shareholders has meant that a strong focus on high-volume sales has been unapologetically trumpeted by the company.
Top of Clarke’s agenda has been an increased presence in big retail chains, most notably in Australia’s biggest drinks outlet Woolworths.
This has led to criticism from small retailers angry at the apparent rush for high-volume, low-value sales and the producer’s willingness to give Woolworths exclusive offers that seem to undercut other sellers.
“They are looking for easy volume in the chains,” one independent retailer told The Sydney Morning Herald.
Clarke, who has headed the company since March, is quoted in the Australian press as saying, “I think sometimes they [independents] get upset when they see someone activate an exclusive better.”
He continued, “Good on Woolworths if they have taken an exclusive and made it a good deal.”
Woolworths’ wine chain Dan Murphy’s has been selling the new Pepperjack Shiraz Cabernet for as little as $17.90 (£9.80) compared with the mid- to high-$20 (around £14-£15) mark that independent retailers sell Treasury’s Pepperjack Shiraz label.
The company, which produces flagship brands like Penfolds and Wolf Blass, has also been heavily involved in ramping up advertising to increase sales – an approach that has been accepted by shareholders.
In Treasury’s annual report released in September, Clarke outlined this focus for the company, writing, “In particular, my team and I have sought to build a performance culture and proactively drive changes to TWE’s business model through a step-up in the consumer marketing of our brands, a reduction in the company’s cost base, and actions to address structural barriers to profitability and growth.”
The company will be holding its annual general meeting on 16 December.
A message to the independents: don’t just complain. If you’re not happy, delist all Treasury wines. You don’t need them. Let them sell to Woolworths and multiples, and continue to succumb to the demands for listing allowances, retrospective discounts, promotional subsidies, payments for gondola ends and featured shelf-space. Let them produce and package wines to the supermarkets’ specifications, with fruit masked by residual sugar and character stripped by manipulation. Perhaps, just perhaps, the board might ask who is in control of Treasury Wine Estates?
Keith Grainger
I agree with Keith. There is no reason to carry a wine unless there is a decent margin to keep the doors open.
How come execs in the wine biz only talk about prices? Funny thing about prices is that there’s always somebody cheaper. It’s a game nobody wins. How come NO execs talk about raising quality? Australia has been in the sales toilet for years and many of their wines are cheap. Do these boneheads see a cause effect ratio here? Didn’t think so.
Keith Grainer – if they were to delist all Treasury wines there wouldn’t be very much left to choose from. Do you know how many brands fall under the TWE umbrella?