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AUS: McGuigan Simeon defends suspension – report

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The outgoing head of McGuigan Simeon has defended the decision to cancel contracts with wine grape growers as being an "indictment of the Australian wine industry."

Speaking to The Australian this weekend, Brian McGuigan, who is set to retire next month, claimed that the company was on firm legal ground when it decided late last week to keep suspensions in place for 16 grape varieties. The wine company, which has been in conflict with grapegrowers' associations in New South Wales and Victoria after suspending contracts, said on Wednesday (8 February) that it would lift suspensions on only nine grape varieties.

Several grape growers have threatened legal action against McGuigan Simeon, but McGuigan told the paper: "I'm very confident any action against us would not be successful."

The decision to suspend existing contracts was "a bit of an indictment of the industry itself, that we ended up with more grapes than we could sell as wine," McGuigan said in the interview.

"There were laws that encouraged a lot of people to come into the grape-growing business," he said. "People thought there was a never-ending thirst for Australian wine in the international market ... and everybody had a feeling we should continue to plant grapes, because we would never have enough."

"I know we seem to be conspicuous because we've been open about it and taken action some would say is aggressive, but I think we had no option," McGuigan added. "We must make sure, from our shareholders' point of view, that we're not the meat in the sandwich."

He said many wine contracts "don't heed changes in the marketplace ... and can't react to market pressure".

He advocated a joint partnership approach to the crisis "whereby we share the gain, but also share the pain".

"If things are tough, it should be tough for everybody," McGuigan told The Australian.

Earlier this month, McGuigan confirmed that he would be replaced as managing director at the company by Dane Hudson. The change will take place on 1 March.


Sectors: Wine

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