Lion's share now includes an ocean of wine

By DITA BE BONI

The lion's share of the domestic liquor industry now lies with Lion Nathan after it succeeded yesterday in its quest for a controlling stake in Montana Wines.

Its controversial move gives it control of the country's largest wine producer.

After buying Corbans last year, the amount of wine produced by Montana equals 60 per cent of all domestic sales and almost 50 per cent of the 19 million litres exported by all domestic producers each year.

Montana also administers almost half the country's 13,000 ha of vineyards in production.

The Lion-controlled company produces the most sauvignon blanc of any winemaker in the world, and will soon be able to say the same for the fashionable red variety pinot noir.

Lion Nathan also has around 50 per cent of domestic beer sales in New Zealand.

And its liquor division, New Zealand Wines & Spirits, controls around 45 per cent of the local spirits market.

Lion Nathan also supplies just over 40 per cent of the competitive Australian beer market against leader Foster's, and has brewing interests in China.

Foster's is also pursuing growth through wine assets - most notably the recent purchase of California's Beringer Estate - and was once interested in Montana and Corbans.

That interest sparked Lion's lightning strike on Montana's share register.

But while Lion management is enthused about its new growth stream, some winemakers say they are anxious that the winemaker be "let alone" to do its job without interference from the brewer.

One South Island vigneron, who did not want to be named, said he was concerned that the money spent by Montana on establishing overseas markets might be trimmed by "the tight purse-stringed Lion."

He said many smaller wineries relied on Montana to pave the way for most of New Zealand's 350-plus small wineries with foreign distributors.

But a West Auckland producer said he was not concerned about any shuffle in ownership.

He said an influx of foreign investment in small New Zealand wineries would enable the "smart" ones to expand their own export markets without having to rely on Montana's efforts.

TAKEOVER VIEWS

Reactions to the events surrounding Lion Nathan's Montana takeover:

Sir Selwyn Cushing, chairman, Air NZ:

"The procedure is most undesirable and reflects very badly on New Zealand commerce generally."

Sir Selwyn was a member of the Securities Commission which in 1993 drafted a takeovers code that was never implemented, but which forms the basis for the code Commerce Minister Paul Swain is introducing in July.

"It would have stimulated fairness and discipline in investment that has been largely overcome by actions such as we've seen in the last few days."

He said colleagues here and overseas had reacted unfavourably to the takeover. "It shows that it takes only a few days to undo all the good."

Michael Barnett, chief executive, Auckland Chamber of Commerce:

"The Government needs to introduce the Takeovers Code immediately and not wait until July. The issue for New Zealand capital markets is about credibility and the confidence of investors to participate."

Don Turkington, managing director, Cavill White Securities:

"We could see more of this corporate activity before the Takeovers Code is introduced as large shareholders look to increase their partial stakes."

Bill Foster, managing director, NZ Stock Exchange:

"We are not convinced the code, the way it is structured, is necessarily the best for the market here in New Zealand."