When Brands Lose their Stories, they Lose their Lives
You can tell when companies have lost it. They do dumb things like putting up prices that are too high already, or they become hard to talk to or work with. TWE has just announced a $100 million loss for the last financial year, and its shares have fallen from an all-time high of A$6.43 a year ago to under $5. CEO David Dearie was given his marching orders late last year after writing off A$160 million, when thousands of gallons of cheap plonk TWE had exported to the US had to be destroyed.
This year, Chinese aspirants have added to TWE’s woes by going cold on the big ticket Penfolds labels. At home, David Dearie’s fear that Woolworths and Coles would strengthen their stranglehold on the Australian market came true, as industry veteran David Farmer observes. All this has slowed down the Private Equity sharks that have been circling the rotting corpse – KPR and TPG going after TWE. Yes, it’s come down to a game of TLAs (Three Letter Achronyms).
Once we had real names
Like Penfolds, Lindemans, Seppelt, Wynns, Leo Buring, Mildara, Saltram, Seaview, Wolf Blass, Rosemount, JY Tulloch …. check HERE for the full list, and the origins of TWE which began before Southcorp and Fosters had their way with our best wineries. Now TWE is drowning in red ink with Australia’s greatest wine brands in its arms. It’s like losing a poker game when you hold all the aces; it’s like Bart Cummings losing the Melbourne Cup when all the horses running in it are his.
Most of these once great brands have been emasculated, eviscerated or reinvented. Lindemans is a tragic example, run by people who have fairy floss for brains selling low-alcohol wine to the weight-conscious. Under Ray Kidd’s leadership, Lindemans grew into a giant lighthouse, a beacon that lit the way forward for others. Then the barbarians took over, men in shiny suits and pockets full of money who knew nothing about wine. Read more in Lindemans – Death by a Thousand Cuts.
Why stories matter
The final irony was Fosters hiving off its wine business and naming it Treasury Wine Estates a couple of years ago, because wine had become ‘a distraction’ to the brewer of the world’s most awful beers. The board encouraged shareholders to sell Fosters to a South African offshoot of a global conglomerate, and TWE was left to fend for itself.
The reasons it failed are legion but a massive loss of history and tradition must’ve been a big factor. What these barbarians don’t understand is that wine lovers love stories: the story behind the label, the story behind the miraculous liquid in the glass they’re holding in their hands; stories about real people who put everything on the line for their dreams, not for the expected profits, and the romance that touches our own dreams.
Instead, we get bland capsules concocted by corporate PR flacks and sanctioned by their legal teams. Or we get the kind of fluff the marketing minds at Lindemans pulled out of their navels: made-up stories about Eliza Lindeman and her 10 daughters. So disconnected from the tradition and value of their brands are these folk that they can’t see the real stories under their noses, stories about vision and determination, courage and resilience, success and failure, joy and pain.
Where to now?
The smart thing to do with TWE would be to sell the better brand names with vineyards and wineries attached where possible. Many have of course been rationalised (erased), but even Lindemans still has a winery in the Hunter Valley. There must be wine-loving entrepreneurs out there who’d love to restore some of these great brands to their former glory.
Sadly, the more likely outcome is that the PE firm that ends up owning TWE will do what PE firms usually do: rationalize structures, fire people and strip assets to get the costs down far enough to show a profit. Then the company is typically sold to another bunch of barbarians. And so it goes, as Kurt Vonnegut used to say.
Kim