The appointment of John Ballard as CEO of struggling wine giant Southcorp has surprised many, but there is growing acceptance it was a shrewd move by the company's board. David Robertson looks at the man and how his arrival will shape Southcorp's future.

The appointment of John Ballard as chief executive of the troubled Australian wine maker Southcorp has surprised investors and left many questioning the motivation for his recruitment. Ballard has been out of the daily grind of running a company for six years and, apart from enjoying the occasional drop, has no experience of the wine industry.

Given this background some analysts were startled by Southcorp's decision to bring Ballard in as a replacement for Keith Lambert, who was sacked in February.

But after some consideration wine industry commentators have come to the view Ballard as a possibly inspired choice to turn around a company that reported a 97% collapse in first half profits.

"We were surprised and worried about the lack of wine experience," admitted one analyst, echoing the views of many. "But he's maybe just what Southcorp needs right now."

Southcorp is a struggling giant. Two years ago the company's share price was heading past A$7 a share and even a year ago it was about A$5.50, but since then it has collapsed to a low of just over A$3 early in March. It has since rallied to A$3.28, still less than half the value it had in the heady days after Southcorp's merger with Rosemount.

When Lambert was chief executive he decided that volume was essential and embarked on aggressive discounting schemes that analysts now say weakened core brands like Penfolds, Lindemans and Rosemount. When it all started going wrong Lambert blamed the retailers - who, to be fair, do operate a duopoly in Australia and are even more powerful in Southcorp's most important foreign market: the UK.

This outburst upset the retailers, further alienating the company at a time of weakness, and chairman Brian Finn was forced to call Roger Corbett, chief executive of Australia's largest supermarket Woolworths, to apologise following Lambert's departure.

John Ballard will be a completely different operator when he takes on what the Sydney Morning Herald described as the "toughest job in corporate Australia" in late April.

For a start, he has useful relationships with Woolworths having been a non-executive director since 1997, and he is also mates with John Fletcher, chief executive of Australia's other supermarket chain, Coles Meyer, after doing a tour of duty with him in the army reserve. These will be very useful contacts as Southcorp seeks to unwind its discounting schemes, which started last week with the scrapping of a Penfolds discount. That discount would have given Australian retailers a free case of Penfolds for every 16 they ordered, which would have amounted to a 6% price cut on arguably the new world's most respected brand. Ballard will have a lot of apologising to do.

For 11 years, until 1997, Ballard was managing director of the Smith's Snackfood Company in Asia Pacific and before this had a number of senior management positions in brand-oriented companies. Although he hasn't got wine experience he does know his way around consumer goods companies; and it is also worth remembering that Stephen Millar had come from brush maker Sabco when he took over BRL Hardy.

Southcorp is clearly hoping that this experience will be invaluable, allowing the company to recover its brand strength and improve relations with retailers.

Recruitment firm Egon Zhender had 40 applications for the job and cut this down to a short list of four. Analysts have questioned what was behind the decision by Finn and Southcorp's 19% shareholder Bob Oatley to choose Ballard rather than a proven force like Coca-Cola Amatil's Terry Davis (a former Fosters man).

Opinion seems to favour a medium-term strategy to rebuild the company (financially and its morale) after a damaging 19 months with Lambert at the helm. Allied Domecq and Fosters are persistently touted as potential buyers but it is unlikely that Oatley will want to sell with the share price this low; and that seems to be the key. Ballard's job is to get Southcorp back on track so its shareholders, many of whom have lost a lot of money in the last 12 months, can start considering options.

The new chief executive is 56 and quit daily management six years ago so it is reasonable to assume he isn't interesting in empire building. He is on a rolling one year contract (worth $1.4m with bonuses that could take it over $2m) so it appears that the new boy, and Finn, didn't want to be tied in. He is the perfect "holding" man. A scenario being put forward by at least one Australian broker is that he will rebuild for two years and then step aside for a long-term successor - or the company will be bought at a more respectable price.

The most likely candidate for long-term successor appears to be Tom Burnet, who runs Southcorp's Americas business. He is considered a rising star within the company and it is thought that Finn spoke specifically to him about now not being the right time to put him in the top job - besides, with profit downgrades from Robert Mondavi last week, Southcorp is going to need its best and brightest to ride a rough time in the US market.

Before Ballard's appointment the name that a couple of brokers were putting into play was Tom Park. Park was chief executive for just four months before he was replaced by Lambert (Park also ran Southcorp's wine division for a year before the Rosemount merger). He then took over the helm at food manufacturer Goodman Fielder but with that company's recent acquisition it looks likely that Park will be a job seeker again. A few egos would have to have been suppressed for Park to have been given the job again but he is considered to have done a good job investing in core brands and cutting costs while at Southcorp. It would have been an interesting choice. Instead, Park is likely to become a free agent and the rumour is that a private equity firm has expressed interested in approaching him to lead a raid on Southcorp. Watch this space…

Whatever happens to Southcorp long term the appointment of Ballard is part of a trend emerging in the post-1990s business community: it is no longer the self-promoting, high profile chief executives that are grabbing the big bucks, companies are instead appointing people who can get a job done. And Southcorp is certainly in need of one of those.