Treasury Wine Estates, the maker of Beringer wines, is dumping up to $35 million worth of wine that's past its prime.
Unsold expired wine has been sitting in warehouses awaiting store shelves, including the mass-marketed Beringer label wine, based in Napa Valley. Unlike fine, more expensive wines, the varieties predominantly sold by the Australian vintner, do not age well.
They are mostly cheap, white wines, such as white Zinfandel. The excess inventory of bottles will be streamrolled so the company can recoup taxes paid.
The winemaker's misfortune is unique. Many winemakers have been enjoying healthy profits as the U.S. wine industry has posted consistent growth.
In a bid to more quickly move old product, Treasury Wine Estates said it will also offer up to $40 million in discounts and rebates to distributors.
"TWE’s leadership team in the Americas believes old and obsolete product is limiting the company’s growth ambitions," said David Dearie, the company's chief executive. "As such, decisive action must be taken to address these barriers to growth, and I am confident that the steps we are taking support our long term growth agenda."
The company said it incorrectly forecast demand for new products in the U.S. and improved distributor logistics have outpaced retail demand.
Dearie said it expects to reduce its U.S. shipments by as much as $40 million.
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