By Eli Greenblat
A 25-year veteran of the beverage, hospitality and wine and spirits industries, is how David Dearie was described by the then Foster’s Group chairman Ian Johnston in late 2010 when the brewer was demerged to create Treasury Wine Estates.
Those were the good old days. When the Foster’s board and investors believed, or perhaps prayed, that by splitting Foster’s beer assets from its global wine business more value would be unlocked and both beverage divisions would be able to better focus on their core labels, markets and customers.
Done and dusted ... former Treasury Wine Estates chief executive David Dearie.Credit: Arsineh Houspian
The beverage company’s troublesome US division, which Foster’s, during the boom times, spent billions of dollars of shareholders’ money on to create one of the best US vineyard portfolios in the world, had already cost the tenure of one chief executive, Trevor O’Hoy, and was at the centre of profit downgrades and write-downs.
But investors were promised a change, a fresh outlook and approach, a demerger to solve all these ills.
After the shock ejection of Treasury Wine Estates boss Dearie this morning, the Foster’s wine curse looks very much alive and kicking, and has claimed its next victim.
The rot set in for Dearie in July when the Scot, who joined Foster’s in 2009 as the boss of its Australian and New Zealand wine business, unveiled a surprise $160 million write-off linked to the US wine business, including the fact that Treasury Wine Estates would have to pour up to $35 million of unwanted wine down the drain.
Analysts were aghast, many were angry and some called for his immediate sacking saying they had lost all confidence in the chief executive and his ability to properly and responsibly run the Americas wine operation, which was suffering from an oversupply and a downturn in consumer confidence.
To be fair to Dearie the problems stemming from the Americas, such as unwanted wine sitting in warehouses gathering dust and slowly turning into stuff you would serve to clear a room, were not of his making.
It went back to decisions made years before that, when the vines were first planted and marketing teams sat around a table to create the kind of labels that didn’t really have much traction among drinkers.
So be it, such is the risks associated with the high-wire act of being a chief executive of one of the biggest wine companies in the world and a leading Australian listed company.
However, the top role at Treasury Wine Estates could now be seen something of a ‘poison chalice’, which has now churned through its second chief executive and will likely claim more before either Treasury Wine Estate is broken into smaller divisions based on a geographic fault line or its premium wines such as Penfolds are demerged.
Better still, the Americas wine business should finally be sold off. It must now be viewed as a failed strategic step that blew billions of dollars of company funds and is best put in the dust bin of history.
Just who will now have the guts and confidence to take the reins from Dearie remains to be seen. Why would any chief executive want to take on a role which has already seen off two people and possibly damaged their careers?
O’Hoy never really went on to operate in the public company space again in a high profile chief executive role after his resigning from Foster’s, and what now for Dearie?
If Dearie didn’t have the skills to run Treasury Wine Estates with 25 years of deep and broad corporate experience in the wine and beverage sector than just who is the better candidate to take over?
Surely any new person elected to the role must have the strategic freedom to rule in or out a sale of the Americas, without the interference of the board who have publicly stated on countless occasions - including this morning - that the US division is a core part of the business and is not for sale.
Maybe Treasury Wine Estates can only have one; either they keep the Americas and sit back and watch a procession of chief executive’s try and fail to turn it around, or they dispose of the troublesome US business and give the new chief executive some clean air to actually make the company a winner and last longer in the role than a bottle of cheap wine.