Pickings......
BY ROBERT MAYNE
The big merger and takeovers in the Australian wine industry have been continuing now for some 30 years. They were initially driven by the desire of the breweries, including Tooths, then Tooheys, then Philip Morris, Gilbeys and so on. A few years ago, Fosters Australia acquired Australia's largest wine company, Southcorp Wines. (also owners of Wolf Blass, Mildara Wines, and Beringer of the United States) .They then made a $3.1 billion dollar offer for the Southcorp brands, which included Penfolds (and their Grange brand), Lindeman's, Wynns and Seppelts. In a reverse takeover the Oatley family, owners of the highly successful Rosemount Estate brand, bought Southcorp. The problem was, they couldn't make the reserve takeover work and troubles started, with winery sales, closures, sackings and big discounting.
Combined with all this -- in tandem in fact -- the big liquor retailers, including Coles Myers and Woolworths, started their own discount battles. Even petrol entered into the battles, and I would take a guess that pharmacies may come next. What is extraordinary about all of this is that there are some 2000 wineries around Australia today, with the big six owning over 80 per cent market share and the rest fighting it out in the boondocks.
So what does all this mean for "ordinary" wine consumers like you and me? Initially it means cheaper wines, though not necessarily better wines. That's because big winemakers don't necessarily make the best wines (yes, with the exception of some of the brands of Penfolds, Wynn's, Blass and so on).
The dynamic of Southcorp being bought by Fosters may not be what it appears. There are some other exceedingly big players in the liquor market around the world. Pernod Ricard of France owns (among other things) Orlando Wyndham; British based Allied Domecq has a huge lineup up of spirits (Beefeater Gin, Canadian Club, Stolichnaya, Tia Maria and Champagne Mumm); London based Diageo has Smirnoff vodka, Johnnie Walker scotch, Gordon's Gin and Guiness; Constellation brands, based in New York has t Hardy's (Australia) , Corona beer, Robert Mondavi in the US and Tsingtao.
This is a multi billion industry which is globalising as quickly as it can. Longer term I expect that while the takeovers may start slowly, they have not finished and the possible Fosters-Southcorp amalgamation may not be the end game I referred to; any of the others could be movers and shakers -- for example Pernod Ricard, who would love to blend their big Jacob's Creek brand with Southcorp's other premium brands. That would give them great strength at both ends of the market place, as would just about any other combination of huge conglomerates.
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