Winery to retain that je ne sais quoi

The biggest winery in New Zealand remains in French hands after Britain's Diageo, the world's largest liquor company, decided not to purchase Allied Domecq Wines NZ.

Pernod Ricard gave Diageo the option to buy about 75 per cent of Allied Domecq Wines NZ, formerly Montana Wines, for 320 million ($814 million) in June. At that time, Diageo was supporting Pernod Ricard in its attempt to take over Allied Domecq.

Zirk van den Berg, spokesman for the New Zealand arm of Allied, said Diageo's decision was met with relief from within the New Zealand company. "We've been New Zealand's leading wine company for a long time.

"We didn't want to lose that heritage and the relationships we've built up with people," he said.

However, it is as yet unclear what Pernod Ricard intends to do with the New Zealand company now.

Diageo's decision to pass on the the bulk of Pernod's New Zealand wine business met with mixed reviews from local winemakers.

George Fistonich, Villa Maria Estate founder, the third largest winemaker in New Zealand, said the move gave Pernod Ricard a disproportionate amount of muscle and much responsibility.

"With close to 50 per cent market share in the wine industry it makes them [Pernod] bigger than the other companies put together. I think it would be important that they act responsibly and not use the powers of their brands, distribution and financial muscle to dominate supermarket shelving and wine lists."

Richard Riddiford, managing director of Palliser Estate, said foreign ownership of the large end of the industry had been "beneficial" for the country's wine industry.

"It has given us global distribution and exposed our New Zealand brands to a whole lot more customers, far quicker than we could have ever done on our own," he said.

Allied Domecq bought Montana and its related wine assets in 2001 for about $1 billion, including $620 million of new foreign investment.

Diageo's option excluded the New Zealand labels of Corban's, Stoneleigh and Church Road.