The Australian wine giant Southcorp and UK drinks distributor Matthew Clark have ended their distribution agreement, following the takeover by Matthew Clark's owner, Constellation Brands, of rival Australian winemaker BRL Hardy.

Southcorp said today that it would accept an undisclosed sum to terminate the UK on-trade distribution contract 14 months early. Southcorp said it couldn't reveal the size of the payout, as Matthew Clark requested the information not be released. However, it will be booked in Southcorp's 2002-03 financial accounts

The Matthew Clark deal had covered most of Southcorp's UK on-trade distribution, and represented about 7% of Southcorp's UK business by value in financial 2002.

Southcorp will instead assume direct responsibility for a number of its larger clients. It may also mean a portfolio shake-out in the UK.

Europe president Jeffrey Wilkinson said: "The change facilitated by the termination of current arrangements gives us the opportunity to modify our product mix, remove some lower value wines, thereby enhancing our product offering to the on-premise market," he said.

Southcorp will assume direct responsibility for a number of large on-trade customers from May 1. Its remaining brands will continue to be available through Matthew Clark until June 30. Then from July 1, Matthew Clark will continue wholesale distribution arrangements for Penfolds, Wynns and Coonawarra Estate, but on a nonexclusive basis.

Southcorp will put in place new arrangements for brands including Rosemount, Lindemans, Seppelt and Seaview. "By that time [July 1st], Southcorp expects to have concluded direct supply relationships with a number of other U.K. wholesalers to facilitate a broader access to the U.K. on-trade market," the Australian company said in a statement.