Nobilo sees export growth in $2b deal

By SIMON HENDERY

The pending $2 billion takeover of Australia's BRL Hardy will open more marketing doors for local subsidiary Nobilo Wines and help boost New Zealand wine sales in general, says Nobilo chief Brian Vieceli.

America's second-largest wine company, Constellation Brands, announced its A$1.9 billion ($2 billion) takeover offer for BRL last Friday.

The global wine business of the merged companies, to be called Constellation Wines, would be the world's biggest wine business with nine international operating divisions and total annual wine sales of more than A$3 billion.

Nobilo Wine Group, New Zealand's second largest wine company, is fully owned by BRL.

Vieceli, Nobilo's managing director, said the takeover would be good for both Nobilo and the wider New Zealand wine market because it would give Nobilo greater market access at a time when production was growing strongly.

Nobilo is forecasting its grape crush will jump from just under 10,000 tonnes last year to 18,000 tonnes in 2007.

The company has targeted the US as a major growth market - 5 per cent of its sales were to the US last year and it intends lifting that to 20 per cent by 2008.

Other New Zealand producers are also planning to boost their production significantly over the next few years. Vieceli chairs a Winegrowers committee formed last year to review the strategy for promoting New Zealand wines as exports grow strongly.

Vieceli said he did not expect changes to the way Nobilo was run after the takeover and he was heartened that BRL's founding managing director, Stephen Millar, would be staying on to run Constellation Wines from Adelaide.

Millar had sanctioned an ongoing $100 million expansion plan at Nobilo and had overseen BRL's impressive growth from a company with a A$90 million market value 10 years ago.

Winegrowers chief executive Philip Gregan said he agreed the BRL-Constellation merger would be positive for the New Zealand wine industry, as was Montana's involvement with Britain-based Allied Domecq.

"Everybody in the industry agrees that access to distribution is one of the key ingredients for market success.

"For Nobilo, being part of [Constellation Wines] is going to be important and hopefully from an industry perspective it will put more New Zealand wine into the marketplace and will make New Zealand wine more visible."

* BRL shares, which had been suspended on the Australian Stock Exchange since Friday morning prior to the announcement of Constellation's offer, jumped A$1.01 ($1.08) yesterday to close 5Ac below Constellation's offer price of A$10.50 ($11.26) a share.

Analysts said the size of the offer meant that a counter bid from another corporate was unlikely.

BRL's largest shareholder, the International Wine Investment Fund, which has an 11 per cent stake, has said the offer appears fair but it would consider it further before asking its unit holders to vote on whether to accept it.