Clarke, whose turn at the helm saw Treasury stock surge fivefold, took over in 2014 when he was tasked with turning around fortunes after strained profit, weak China sales and cost troubles had stoked speculation of a takeover.

What followed was a nearly tenfold jump in the Melbourne-headquartered company's post-tax earnings, with its latest annual profit scaling a record in August due to robust demand for its premium wines in China, now its biggest market.

"It is without question the extraordinary transformation and outstanding financial returns that TWE has achieved, have been driven by Michael's leadership over the past five and a half years," Chairman Paul Rayner said in a statement.

(For an interactive graphic on TWE profit from 2013 to 2019, click - https://fingfx.thomsonreuters.com/gfx/editorcharts/TWE-PROFITS-CEO/0H001QXED914/index.html)

Clarke previously held senior executive roles at Kraft Foods, The Coca-Cola Company and Reebok International, and was head of British food maker Premier Foods PLC immediately before taking over at Treasury.

Shares of Treasury, which owns the Penfolds and Wolf Blass labels, fell as much as 12.7% in heavy trade on Monday and were set for their worst session in well over a year.

"A combination of two things has got the market nervous with regards to Treasury - the long-serving CEO is stepping down ... and Mr. Clarke has certainly transformed Treasury Wines," said James McGlew, executive director of corporate stockbroking at Argonaut.

Secondly, McGlew said, Treasury is trading on very lofty multiples and "the single biggest challenge for them is getting their earnings up to a level that the market's been pricing them."

According to Refinitiv Eikon data, Treasury has a price-to-earnings ratio of 24.06, compared with 22.00 for U.S.-based rival Constellation Brands Inc.

The company's latest annual results had indicated that the winemaker's global footprint will keep profit supported even as a trade dispute between China and the United States, where it owns production facilities, threatens to disrupt consumption.

Treasury on Monday said Clarke would be replaced by Chief Operating Officer Tim Ford, who previously held a senior role overseeing supply in the Americas, a key market for Treasury.

Clarke would also serve as an advisor to the company for up to one more year after his retirement in the first quarter of fiscal 2021 "to provide strategic support across key initiatives including potential merger and acquisition opportunities," Treasury said.

(Reporting by Devika Syamnath and Rushil Dutta in Bengaluru; Editing by Daniel Wallis and Christopher Cushing)

By Devika Syamnath