Lion loses French wine king

By SIMON HENDERY

Emerging vintner Lion Nathan has parted company with its newly appointed top wine strategist, a move which took some of the fizz out of the company's upbeat annual meeting yesterday.

The "mutually agreed" departure of high-flying French wine executive Dominique Bach, after only two months in the job, is another hiccup in the transtasman brewing giant's diversification into wine.

This year, Lion lost out in a bidding war for New Zealand's biggest winemaker, Montana, and analysts have criticised the price the company is paying for control of two premium South Australian producers, Petaluma and Banksia.

But at yesterday's annual meeting in Sydney, chairman Geoff Ricketts and chief executive Gordon Cairns remained staunch on Lion's wine strategy.

"Going forward, we plan to take a reasonably cautious approach with wine," Mr Ricketts told about 60 shareholders.

"Our focus over the next 12 months will be on bedding down these two acquisitions and working with strong management teams in Petaluma and Banksia to ensure that they continue to deliver great results.

"During that period as things stand, it is not our intention to make any significant further investments in the wine industry."

Mr Cairns repeated the company's view that the Petaluma/Banksia acquisition price - at 13.4 times forecast earnings before interest, tax, depreciation and amortisation - was fair "and certainly in line with comparable acquisitions in the past few years in Australia".

He said Lion - which now owns 58 per cent of Banksia and 100 per cent of Petaluma - saw opportunities for profitable growth in the premium Australian wine market.

"This is underpinned by our per capita consumption in both the UK and the USA, and the relatively small share held by Australian wines in those countries."

Lion announced yesterday it had appointed Petaluma chairman Brian Croser chairman of its wine group.

Paul Francis, the executive who led the Banksia and Petaluma acquisitions, replaces Mr Bach as wine group managing director.

A company statement said Mr Bach's departure was by mutual agreement "because changes to the group's wine strategy, following the acquisition of Petaluma and Banksia, regrettably made the roles less attractive to Mr Bach."

Lion spokesman Warwick Bryan declined to elaborate on Mr Bach's departure or on how the company's wine strategy had changed.

Before joining Lion, Mr Bach was president and chief executive of Chandon Estates, a Napa Valley-based affiliate of LVMH/Moet Hennessy-Louis Vuitton. It has wineries in five countries and an annual turnover of $US200 million.

Mr Cairns told yesterday's meeting that Lion was on track to deliver profit growth of between 10 and 15 per cent this financial year.

"In Australia, sales are on plan, and November was our highest market share for that month during my tenure.

"In New Zealand sales are up 2 per cent over the same period a year ago.

"In China we are growing, albeit in the low winter season, at 29 per cent to a year ago."