Treasury Wine Estates of Australia has said that it is planning destroy old US inventory that would reduce pre-tax earnings by A$160 million during the financial year 2013.

The move will also impact the level of shipments during the financial year 2014. The company said that it would work with the major distributors in the US to destroy aged and excess inventory. It said that fiscal earnings before interest, tax and self-generating and regenerating assets (SGARA) is believed to be in line with A$216 million expected by analysts before provision for the inventory reduction.

"TWE's leadership team in the Americas believes old and obsolete product is limiting the country's growth ambitions. 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," said Chief Executive David Dearie in a statement.

Treasury said that it would destroy inventory worth more than $35 million of aged and excess stock in the US after it admitted that it overestimated the demand in the US market. The shares of the company fell about 8 per cent following the media reports.