Can Treasury get back in the black?
Shareholders in the troubled owner of Penfolds wines, Treasury Wine Estates, have to go back before 2001 to find when the group succeeded in the US - and that was one of its predecessor companies, Beringer wine.
In 2001, Foster's paid $2.9 billion to buy Beringer, and shareholders could be forgiven for thinking it's pretty much been downhill since for its global wine ambitions.
Within a few years of buying Beringer, closures and writeoffs were already under way with the North American market suffering a glut of product. Foster's paid top dollar to buy a business at the wrong time in the cycle.
"Beringer had a great track record before Foster's bought it," Treasury chairman Paul Rayner admitted on Monday.
He went on to express confidence in the prospects of Treasury making a go of it in the US, although few give the group much hope in the near future.
Treasury shares were dumped on Monday on the news it had axed chief executive David Dearie, for its US blunders, notwithstanding residual optimism of a takeover putting the group - and its shareholders - out of their misery if the board can't get it right.
In late July, Treasury disclosed heavy losses after a decision to write off - and destroy - more than 500,000 cases of stock in the US. That slashed one-third off the group's sharemarket value in a matter of hours.
But, perhaps more importantly, that triggered a board review that led to the ouster of Dearie, who had run the Foster's wine business from mid-2009, before it was spun out to form Treasury two years ago. His term as chief executive came to an end at the weekend, Rayner said on Monday.
Given that Dearie has not been dismissed for any obvious impropriety, he is likely to have left with 12 months' pay in hand, although some performance rights would appear not to vest.
With the search for a replacement now under way, it will be months before the new boss is selected, let alone on deck. Then, once he or she has settled in and made any changes to the strategy, it will be a couple of years before shareholders can expect any fundamental revival.
Treasury is just the latest in a long line of Australian companies brought undone by the vagaries of the US market. Americans may speak the same language, but it is hard graft taking on the locals on their home turf, especially a sector with the distribution complexities of alcohol.
Building materials (CSR, Boral, James Hardie) have succeeded in the US at various times, medical equipment (think Cochlear and Resmed) have made a go of it, but the consumer products space is a nightmare.
The privately owned Yellowtail did well for a time by pitching to a clearly defined market segment - cheap and cheerful wines at the bottom end of the market - although the strong Australian dollar has turned the tables on its success over the past couple of years.
For Treasury, which is selling into the middle market - what it likes to term the "masstige" sector - steady investment in brand and product support is fundamental, and that appears to be where the group has come unstuck.
Former Unilever executive and board member Warwick Every-Burns will run the show for now, although on Monday he denied any interest in taking the position full-time.
Dearie, at 52, has been replaced by a greybeard. Every-Burns, at 60, joins the likes of Mike Kane at Boral and Graeme Hunt at Transfield who, as directors, stepped in when their respective chief executives were found wanting.
To succeed, a chief executive who understands the US market "is a distinct advantage", Rayner said on Monday. With the US accounting for close to half of Treasury's sales volumes, that is a clear understatement.
Treasury has several directors with a background in consumer markets - from chairman Rayner (ex-British American Tobacco) to Peter Hearl (ex-Yum Brands and Pepsico) and Michael Verdon Cheek, who is ex-Brown-Forman, the marketer of Jack Daniel's whiskey and Finlandia vodka, among other brands, and which is where Dearie worked before joining Foster's. But Verdon Cheek is the only one familiar with passing familiarity with the US liquor industry, and even then his exposure was via the spirits market since he was with Finlandia vodka.
Treasury makes some terrific wines. The issue is not the product, but distribution and, more particularly, marketing.
Given the primary importance of the US to Treasury's fortunes, the group faces a fundamental decision: should the chief executive actually be based in the US, or should they simply hire someone who knows the US market for alcoholic beverages?
As for Treasury shareholders, they need to answer one simple question: do I need to be here? Sure, there's no gain without pain, but in the absence of any takeover, it is hard to see much prospect for a quick recovery in the shares. And banking on a takeover may also be an exercise in futility for the time being, since any corporate interest in Treasury will hinge closely on how quick a turnaround in the US emerges.