Treasury Wine Estates has confirmed Justin Pipito as its permanent group chief financial officer, making substantive an appointment he had held on an interim basis since the start of the Australian winter.
The company told the Australian Securities Exchange that Pipito takes the role on a permanent basis following a process that considered both internal and external candidates. He had been serving as interim chief financial and strategy officer since the first of June, and the permanent appointment took effect at the beginning of this month.
An internal appointment at a company that needed one
Pipito joined Treasury Wine Estates about a decade ago and has held a series of senior finance roles there, including chief financial officer of the Penfolds division, the company's most valuable brand and the engine of its luxury strategy. Running the numbers for Penfolds is not a general finance posting at this company. It is the business whose pricing, allocation and China exposure determine group earnings, and someone who has done that job understands the commercial mechanics rather than only the reporting.
Confirming an internal candidate after running an external search also says something. Treasury Wine Estates has had an unsettled two years at the top of its finance function and in its strategy for the commercial end of its portfolio, and the board has evidently decided that continuity in the finance seat is worth more than a fresh external perspective.
The brief he inherits
The company's position is a tale of two portfolios. The luxury end, led by Penfolds and by the American acquisition of Daou Vineyards, has carried earnings and margin. The commercial end, the inexpensive wine that still accounts for a large share of volume, has been in structural decline across the industry as younger drinkers buy less wine and as retailer own label takes share. Treasury Wine Estates has been working through what to keep and what to sell, and the arithmetic of that decision is a finance exercise.
The second item on the brief is China. The removal of Chinese tariffs on Australian wine reopened the market that Penfolds had been built to serve, and the company has been rebuilding distribution there. How quickly that converts into sustained volume rather than a restocking bounce is the single largest swing factor in its forecasts, and the chief financial officer is the person who has to put a number on it for the market.
Debt is the third. The Daou acquisition was partly debt funded and the company has guided to reducing leverage, which constrains how much it can spend on the brand investment the luxury strategy requires. Balancing those is the ordinary work of the job, but it is the work that will determine whether this appointment is judged a success.
About Treasury Wine Estates
Treasury Wine Estates is one of the world's largest listed wine companies, with brands including Penfolds, Wolf Blass, Lindeman's, Beringer, Matua and Daou. It is headquartered in Melbourne and listed on the Australian Securities Exchange.
