Australia's largest wine company, Treasury Wine Estates (TWE) is preparing to shed 175 jobs and invest more heavily in marketing and promoting its brands in a bid to help turn the business around.
The job cuts represent a five per cent reduction in the workforce and come as the company seeks to remove $35 million in costs from the business in the 2015 financial year.
Since February, TWE has been led by Michael Clarke, who replaced its former CEO, David Dearie, who was dismissed last year after a writedown of the business in the United States in July 2013.
Clarke said TWE must "take the tough decisions to fund the step up in consumer marketing by reducing overheads".
"Over the last three years, overhead costs have increased at the expense of investing in our brands, a situation which is simply not sustainable and which we are now addressing,” he said.
TWE owns a number of wine brands including Penfolds,Wolf Blass, Seaview and Lindeman's and Clarke has said extra marketing funds to the global and international brands, which comprise around a quarter of its 83 brands.
Clarke identified a need to build the strength of TWE’s brands, marketing and sales capabilities, while addressing TWE’s cost base, as immediate priorities to improve the company’s performance.
“TWE’s brands have suffered from a lack of consumer facing marketing investment and we will address this in fiscal 2015 by increasing consumer marketing spend in fiscal 2015 by circa 50 per cent relative to the prior year. It is imperative that our marketing and sales capabilities are more in line with the company’s ability to make outstanding wines across all categories,” he said.
TWE also this week rejected a takeover bid by the investment firm Kholberg Kravis Roberts, which offered to pay $4.70 a share, valuing the company at $3.05 billion, on the grounds that the offer didn't represent the true value of the company.
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