Sale may turn whiteware into wine

By Joe Helm

Adelaide-based Southcorp's decision to sell its whiteware division to Email may have ramifications for the New Zealand wine industry.

Southcorp, which owns vineyards in Australia, California and France, has budgeted the $A145 million ($NZ169 million) it will receive from the whiteware sale to develop and buy wine businesses in Australia and overseas.

New Zealand wine industry sources yesterday said the local wine industry was fragmented and needed to be rationalised into bigger units to compete effectively internationally.

That was the rationale for the recent purchase of Selaks by Nobilo.

Australian-based wine company BRL Hardy has a 23.6 per cent stake in Nobilo which recently raised $7 million through a public share issue.

Southcorp, which has labels such as Penfolds, Lindemans and Seppelts and annual sales of $A600 million, owns no winemaking assets in New Zealand.

Whether or not Southcorp, which had sales of $A607 million from wine in its 1998 year, is interested in being part of the process of rationalising the New Zealand wine industry is unclear.

It is also unclear if any New Zealand wine companies are actually for sale.

"Our winemakers tend to be strongly independent types," said one source.

"They may not take kindly to the big boys, especially from overseas, coming in and telling them how to do things."

However, the future of our second-largest wine company, Corbans, is now being reviewed by its owner, the DB Group.

A decision is believed to be two or three months away.

DB shareholders are unlikely to get any meaningful update on progress on the Corbans review at their annual meeting today.

In the year to September 30, DB reported wine revenue of $107.42 million which produced an operating surplus of $11.95 million before interest, tax and non-recurring items.

In announcing the review of Corbans in November, DB managing director Brian Blake said "if we can conclude there are real opportunities for Corbans, that's where our future investment will be."

Mr Blake also noted DB's major shareholder, Heineken subsidiary Asia Pacific Breweries, was more cautious about investments in the wine industry.

That raised the possibility of DB selling all or part of Corbans, perhaps through a public share float or to another party such as Southcorp.

The success of the recent Nobilo float and other unlisted wine company share issues show there is a keen public appetite for investment in wine companies.

Southcorp executives were unavailable for comment yesterday.