There has been a marvellous game of leapfrog among Australia's biggest wine companies recently. Southcorp (Penfolds, Lindemans, Seppelt, Wynns, Uncle Tom Cobley and all) and BRL Hardys were the two biggest and at each others' throats. As reported here, Hardys recently overtook Southcorp, in terms of both volume and in warmth and cuddliness. (Penfolds had long suffered from being seen as a rather stodgy monolith.)
Then, earlier this year the merger was announced between Southcorp, then run by a non-wine corporate animal, and the family-owned Rosemount which had made such enviable progress in export markets, especially the US. At a fancy press conference last month over breakfast at Claridges in London (the message was clearly 'We're a big, grownup multinational now'), it was clear that the Rosemount team had stormed the Southcorp citadel. Nuriootpa (South Australia and Southcorp HQ) had been conquered by Rosemount's Sydney/Denman team. Keith Lambert CEO of Rosemount, and now CEO of whatever they are going to call Southcorp/Rosemount, rubbed our noses in graphs showing just how brilliantly Rosemount brands had grown while Penfolds' progress had been relatively dismal. There was lots of talk about growing brands, rationalising the poor performers, and the new omnipotence of Rosemount's long-time chief winemaker Phillip Shaw (who always seemed too delightfully laid back for the corporate fast lane into which he has been thrust).
This new alliance was definitively bigger than BRL Hardy, so there! BUT – it was also definitively Australian. Didn't they want to be a more international company? Lambert was asked. Weren't they rather ripe for a takeover? Such concerns were brushed aside as Rosemount/Southcorp basked in the glow of sheer size (180 million litres of wine a year; still only a fifth as big as Gallo) and a clarity of purpose (world domination again).
In the last few days however has come the announcement that arch-rivals BRL Hardy have now gone one better – as they would doubtless see it. After long and eventually fruitless talks about taking over Kendall Jackson, Jess Jackson's hugely successful California outfit making oceans of branded Chardonnay, BRL Hardy has now joined America's second largest wine supplier (and biggest distributor of wine and spirits), Constellation Brands. This is the holding company of the old, New York state-based Canandaigua which owns among other things Britain's largest distributor of wine and spirits, Matthew Clark.
The scheme is initially a 100-million-dollar joint venture involving the existing Monterey winery for Farallon and Constellation distributing Hardy's wines in the US but Hardy are busy issuing bullish statements about all the hundreds of millions of dollars it is planning to spend on further acquisitions in the US. So what does this mean for the normal, wine-loving consumer? The most ominous statement from Rosemount/Southcorp about their merger is 'we believe this is a great opportunity for improving profitability'. This was at a conference mainly for financial journalists, after all, but there is certainly no chance of wines carrying the names Rosemount, Penfolds, Lindemans, Seppelt, Wynns etc are going to get any less expensive. And the signs are that they will be playing around with what I am sure they call their 'brand portfolio' so as to make even more money out of us even more efficiently. They have clearly stated they plan to make Penfolds reds a bit softer and release them earlier. Let's hope the new team do a better job at looking after Southcorp's more interesting acquisitions such as Coldstream Hills in the Yarra Valley and James Herrick in the Languedoc than their predecessors. BRL Hardy seem to be quite impressively on track with their Languedoc outpost ('anything you can do...') Domaine La Baume. Look out for their Viognier. The joke is that these two outfits effectively swapped winemakers a few months ago. But alas, as with everything else that is big and Australian in wine nowadays, individual winemakers are as tiny cogs in the wheel compared to corporate strategists.
So what does this mean for the normal, wine-loving consumer? The most ominous statement from Rosemount/Southcorp about their merger is 'we believe this is a great opportunity for improving profitability'. This was at a conference mainly for financial journalists, after all, but there is certainly no chance of wines carrying the names Rosemount, Penfolds, Lindemans, Seppelt, Wynns etc are going to get any less expensive. And the signs are that they will be playing around with what I am sure they call their 'brand portfolio' so as to make even more money out of us even more efficiently. They have clearly stated they plan to make Penfolds reds a bit softer and release them earlier. Let's hope the new team do a better job at looking after Southcorp's more interesting acquisitions such as Coldstream Hills in the Yarra Valley and James Herrick in the Languedoc than their predecessors. BRL Hardy seem to be quite impressively on track with their Languedoc outpost ('anything you can do...') Domaine La Baume. Look out for their Viognier. The joke is that these two outfits effectively swapped winemakers a few months ago. But alas, as with everything else that is big and Australian in wine nowadays, individual winemakers are as tiny cogs in the wheel compared to corporate strategists.
