Treasury Wine Estates (TWE), the owner of wine brands including Beringer, Penfolds, Wolf Blass and Stags Leap Winery, has announced that it will ditch excess and old stock, due in part to "overambitious forecasting."
TWE, which sold more than 12.5 million 9-liter cases of wine in the U.S. market in 2012, making it the nation's fifth-biggest wine supplier, said it would take a hit worth $160 million Australian dollars ($145 million) to pre-tax earnings in the 2013 fiscal year to cut aged inventory.
It will offer U.S. distributors as much as $40 million in discounts to help sales of its current-release wines.
The company has also revealed that it will reduce the volume of wine sent to the U.S. by as much as $30 million in the coming year. This reduction will leave Treasury with an oversupply of grapes, as well as bulk and finished wine to the value of $85 million.
David Dearie, TWE chief executive, said: "Excess inventory affecting TWE's U.S. supply chain has arisen as a result of three elements: over-ambitious forecasting of new commercial product launches, improved distributor logistics, and old and out-of-date stock which both TWE and our distributor partners would prefer to destroy."
He added: "TWE's leadership team in the Americas believes old and obsolete product is limiting the company's growth ambitions."
On the Australian Stock Exchange, Treasury shares fell by as much as 9.5 percent on Monday after the company's announcement.