Australian winery to dump $35M down the drain

One of Australia's largest wine companies plans to pour out about a million bottles of wine and spend $40 million heavily discounting what's left because its lower-end products are too old and about to expire.

Treasury Wine Estates, which makes many prominent Australian wine brands including Lindemans, Penfolds, Rosemount and Wolf Blass, told investors in a statement Monday that it is working with its American-based wine selling partners to get rid of millions of the company's "excess, aged and deteriorating" bottles of wine, because they are sitting on warehouse shelves, spoiling.

"This includes action to destroy their old and aged commercial stock, ensuring that only the freshest and highest quality wines are available for brand conscious U.S. consumers," the company said.

A spokesperson for the company confirmed to CBC News in an email that the bottles to be destroyed or discounted are only in the U.S., and Canada is not affected.

If properly stored and transported, wine will improve with age and could theoretically benefit from being saved for a longer time before opening. But the wine included in the writedown is mainly on the lower end of the market — wines that are meant to be consumed shortly after bottling because they actually deterioriate over time.

"Luxury wines are crafted to age whereas [other brands] are designed to be consumed younger," company's chief executive David Dearie told investors on a conference call to discuss the writedown. "[What’s left is] definitely good wine that we want to move through the system."

The value of the wine to be destroyed is $35 million Australian, or about $33.6 million Canadian. In a release, the company also said it's going to spend an additional $40 million to discount what's left on U.S. shelves to consumers.

"TWE has worked hard to establish a reputation for quality," Dearie said. "We remain committed to providing trusted and iconic brands for our loyal consumers, and this commitment has resulted in our decision to work with our partners to destroy old and out-of-date product in the U.S. distribution network."