Treasury Wine Estates Ltd. Chief Executive Officer Mike Clarke rescued almost A$1 billion ($753 million) of market value in 51 minutes with a hastily mounted defense of the company’s business in China.
The Penfolds producer tumbled 13 percent early Thursday after the Australian Financial Review reported China wholesalers were sitting on a glut of low-end wine. Unsold stock had piled up because Treasury was forcing distributors to buy cheaper labels if they wanted to also sell premium brands, the AFR said.
Clarke convened a call with analysts for 11:30 a.m. Sydney time to say he had no interest in working with wholesalers aiming to cherry pick his top brands. He said each of the company’s core 8-to-10 labels is growing in China -- Australia’s biggest wine-export market -- and questioned the motives of disgruntled distributors. His message: work with us, or go your own way.
His muscular response had the desired effect -- the stock, which had plunged as low as A$15.64 in early trading, clawed back more than half its losses to close at A$16.90, down 6 percent for the day.