Former Treasury Wine Estates executive calls for broader overhaul
Robert Foye, former global chief operating officer of Treasury Wine Estates and now a shareholder in the business, has argued the company’s latest restructuring does not go far enough to address persistent weaknesses.
Treasury Wine Estates is facing renewed scrutiny after former global chief operating officer Robert Foye publicly argued that the company’s latest restructuring does not go far enough to address ongoing weaknesses in key markets.
Foye, who previously led Treasury’s US and Asia operations during a period of expansion and now remains a shareholder, said the company’s decision to return to a geographic operating model tackles only part of a wider problem.
His intervention follows Treasury’s recent recovery plan, as previously reported by the drinks business, which saw the company reorganise into four regional divisions covering the Americas, ANZ and Europe, Greater China and Emerging Markets. The announcement sent shares up 17% in a single trading session, although the stock remains substantially below pre-pandemic levels.
Concerns over execution and governance
According to information provided by Foye, the company continues to face execution issues in both the US and Asia despite structural adjustments. He has also raised concerns over the level of operating experience represented at board level, alongside cost pressures affecting supply chain operations and selling, general and administrative expenditure.
Foye is now advocating a broader turnaround plan that would include a detailed review of Treasury’s US business, a recovery strategy for Asia and structural cost reductions. He has also proposed board-level changes to strengthen operational expertise.
The backdrop to these concerns is a share price decline of more than 60% over the past two years, coupled with ongoing questions around pricing, distribution and performance across several important markets.
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Treasury seeks regional focus
As reported by the drinks business in April, chief executive Sam Fischer said the move to regional divisions would “drive clearer accountability for performance and enable faster, more market-connected decision making as a foundation for consistent depletions growth”.
The restructure, due to take effect from October, replaces Treasury’s previous brand-led model with regionally managed operations intended to give local teams greater control over product portfolios and strategy.
Treasury also moved to refinance AU$300m in debt facilities, easing speculation around pressure on the company’s balance sheet.
Mixed performance across markets
Treasury has pointed to improving sales momentum in some areas, particularly for Penfolds in China and wider Asian markets. According to company figures reported by the drinks business, Penfolds sales through distributors in China rose 40% during the three months to the end of February compared with the previous three-month period.
The Americas division also returned to growth, with sales increasing 9.1%, supported by Treasury’s premium California assets, including Frank Family Vineyards and DAOU Vineyards.
Even so, Treasury’s recent performance has been marked by volatility. Earlier this year, Fischer cancelled the company’s dividend and wrote off the entire AU$649m goodwill value of the US business.
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