Lawsuit filed after six million bottles of wine poured down the drain

Tuesday, 29 October, 2013
Times Live
Global drinks giant Treasury Wine Estates was Monday facing a class-action lawsuit from Australian shareholders after oversupply issues forced six million bottles of wine to be poured down the drain.
Law firm Maurice Blackburn and class action funder IMF Australia said they were preparing a shareholder lawsuit against Treasury, the wine business spun off from Australian beverages titan Foster's in 2011.

The glut-hit wine company, which owns major brands including Penfolds, Rosemount Estate and Wolf Blass, shocked the market in July when it unveiled AUS$160 million (US$154 million) in writedowns related to oversupply problems in the United States.

"The impairment included a AUS$33 million provision to pour six million bottles of out-of-date wine down the drain," IMF said in a joint statement with Maurice Blackburn.

The class-action suit, which has yet to be formally filed, will allege that Treasury failed to keep shareholders adequately informed of the overstocking of its US distributors and the potential financial impact.

When the full extent of the problem of "old and aged" stock was unveiled in July, IMF said shareholders lost millions of dollars.

"We allege that the market was not told that the US distributor inventory levels of some brands were so high that Treasury Wines was at risk of having to destroy excess stock or give rebates or discounts to the distributors for excess, aged and deteriorating inventory," said IMF investment manager Simon Dluzniak.

"By not disclosing the possibility of a material write-down when we allege it should have, the company caused shareholders to suffer financial loss."

To read more, click here