Subscriber login Close [x]
remember me
You are not logged in.

TWE's new chief executive says "structural changes" inevitable

Published:  08 April, 2014

A week into his new role as chief executive at Treasury Wine Estates, Michael Clarke has admitted "there is a lot that needs to be fixed."

Speaking to investors and analysts on a conference call today, Clarke said that some fixes may take time, but that change was needed to deliver on sustainable growth in the future. There are "structural issues that are impacting our business that have been left for far too long that require time to put right," said Clarke. He further admitted that "there have been too many structural things that we have not addressed for too long in this company and we are going to address it quite quickly".

Clarke said: "There is an immediate need to reduce our overall expenditure.  It is equally important that we reinvest these savings to increase consumer marketing, increase our brand equity and connection with consumers and drive momentum in our top line and margins overtime."

The structural changes that Clarke intends to make include "changes to our brand prioritisation, cost base and infrastructural capacity." This may mean that TWE could possibly sell off some of the brands that are currently in the company's portfolio.

Clarke said: "I do think we have too many brands in our portfolio."

Clarke did outline three areas of opportunity for the business including focusing on consumer marketing of the premium brands, including "connecting with consumers, retailers and distributors", increasing "selling execution capabilities" and making "structural changes" in the business. 

"I do feel that this is a business that can improve and can get better," said Clarke. But in order to improve performance he said: "I want to get rid of anything that is excess in the company."

On the call Clarke did see strengths within TWE to build on in order to help turn the company's performance around. These included the high quality standards of the wine produced particularly among the premium brands in the portfolio, the strong balance sheet that can help support some of the changes Clarke sees as necessary to deliver sustainable future growth and the people that are with the organisation.

Clarke came on board to familiarise himself with the business on February 20, 2014 and took over as chief executive on March 31, 2014.  He joined the business because he sees TWE as having "considerable upside opportunity" despite "under performance and poor execution by Treasury wine estates over recent years".