Lion Nathan, the Australian drinks giant, wants to create a wine division large enough to contribute one third of total annual earnings to the Lion business within three years.

In a report in today's Sydney Morning Herald, Lion Nathan's investor relations director, Warwick Bryan said: "If you take Montana on its own, that business will deliver EBIT of around A$100m in three years. Over that period we would build a reasonably significant wine business that would complement Montana."

The report also said he confirmed the company had a rough target of generating one-third of earnings from wine by 2005-2006.

The goal would probably have seen Lion need to acquire a small to medium size Australian winery and speculation has already mounted over the potential targets with names such as Petaluam, Banskia, Evans & Tate and Peter Lehman being mentioned.

However, Lion's targets where thrown into disarray today with the news that The New Zealand Stock Exchange had found in favour of Allied Domecq over the fight for control of Montana Wines.

A Stock Exchange investigation has ruled that Lion Nathan's acquisition of some of its 62% stake in Montana breached stock market rules.

The Australian brewer may now be forced to divest some of its stake, which could hand control of Montana to Allied Domecq.