Nobilo set to ride on giants

By SIMON HENDERY liquor writer

Nobilo, New Zealand's second-biggest winemaker, could become part of the world's largest wine business if merger talks between its Australian parent and a US liquor giant bear fruit.

BRL Hardy, one of Australia's three largest winemakers, said yesterday that it was in "advanced discussions" with New York-based Constellation Brands regarding a possible merger.

The two companies are already working together - in 2001 they set up a joint venture, Pacific Wine Partners, which markets BRL wines in the United States.

The two companies' combined operations would create the world's largest wine business with annual sales of about A$3 billion ($3.24 billion), said BRL managing director Stephen Millar.

BRL shares soared 16.7 per cent on the Australian Stock Exchange yesterday on news of the talks, gaining A$1.28 to A$8.95.

Australian wine exports rose 26 per cent to 471 million litres last year, 32 per cent of which was sold in the US.

The Australian Wine & Brandy Corp said last week that strong growth in the American market reflected the benefits of recent alliances and joint ventures between major US interests and large producers such as BRL.

An Australian media report yesterday said that Constellation, the second-largest supplier of wine in the US, was preparing a A$1.5 billion takeover bid for BRL.

But Constellation chairman and chief executive Richard Sands said talks were continuing and "we have not yet reached agreement on a structure or transaction value".

He said the combined companies would have a strong international wine portfolio to market worldwide, with an emphasis on the fast-growing New World category: wines from the US, Australia, New Zealand and Chile.

BRL declined to comment yesterday on the benefits of a merger, saying it was too early to do so.

Brian Vieceli, managing director of Nobilo Wine Group, also declined to comment.

In 2000 BRL spent about $30 million to acquire the 60 per cent of Nobilo it did not already own.

Nobilo crushed just under 10,000 tonnes of grapes last year - a sizeable chunk of New Zealand's 120,000 tonne vintage but still a drop in the bucket compared with the 313,600 tonnes crushed by BRL across all its Australian wineries.

Constellation, in addition to its wines and spirits interests, is the second-largest US importer of beer, including Mexican label Corona Extra, the top-selling imported beer in the US.

New Zealand's largest wine producer, Montana, is owned by British liquor giant Allied Domecq.