AUSTRALIA: McGuigan blames Southcorp for spiral
The managing director of McGuigan Simeon Wines has launched an attack on Southcorp. Brian McGuigan yesterday (7 December) accused Southcorp for starting a discounting blitz which he blamed for a "downward spiral" in the industry.
Southcorp's former chief executive Keith Lambert took to the industry with "a machine gun" when he started a discounting blitz in early 2002 to help recover costs in the group, McGuigan claimed.
McGuigan said Southcorp's problems stemmed from its failure to streamline its businesses - including the Lindemans, Rosemount, Penfolds and Wynns Coonawarra brands - while the exchange rates were good.
The discounting led to the common price of bottled table wine slipping from about A$13 to A$19 down to below A$10.
"This action by the number one Australian company cast a downward spiral on the rest of the companies and sucked the lesser companies into the vortex," Mr McGuigan told an American Chamber of Commerce lunch in Sydney.
He said it led to BRL Hardy being sold to Constellation Brands in 2003, as well as the "demise" of Foster's Group Ltd's Beringer Blass wine business, which last financial year suffered a 45% earnings decline in North America.
"Any industry needs to have the big fellows strong. We need the big fellows to be blazing the way," Mr McGuigan said.
A Southcorp spokesman said its views of the past few years were already on the public record and it did not want to comment on the views of other companies.
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