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AUSTRALIA: Lion Nathan looks abroad for wine acquisition

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Australian beer and wine group, Lion Nathan, has said it is looking to the US, South America or South Africa for its next major wine acquisition.

Lion Nathan managing director, Gordon Cairns, said a big-volume purchase in Australia would run the risk of diminishing the premium status of its fledgling wine division, comprising Petaluma and Banksia. Rather, Cairns was quoted by the Sydney Morning Herald as saying, the company would be looking to transplant its unique strategy and establish a niche premium wine operation in another New World wine market.
 
"When you're at the top end (of the wine market) it is difficult to significantly increase scale because you lose that premium standing," Cairns said. "The opportunity is to take this model to another country."

Last year, Lion Nathan acquired the Petaluma and Banksia wine businesses for A$370m. Both are relatively high margin/low volume operations. Before that the company lost out in an auction for the largest New Zealand wine company, Montana, which was eventually acquired by Allied Domecq for A$800m.

While Lion Nathan now has a significant wine operation there has been little indication to date concerning its future strategy for the wine sector. Analysts had expected the group to make another major volume-orientated acquisition in Australia to build mass in the home market.

Wine contributed A$3.4m before tax to the group's earnings before interest, tax and amortisation of almost A$207m for the six months to the end of March. Lion Nathan has said that it will not make another wine acquisition during this financial year which ends in September.


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