Montana chief used to storms

By DITA DE BONI

Peter Hubscher shakes the rain from his hair and contemplates the storm outside.

Despite being one of the country's pre-eminent horticulturists, Montana's executive director seems unconcerned about the heavy rain and gales flogging his company's Glen Innes headquarters.

For one thing, his vineyards are in drier parts of the country, including parched Marlborough. For another, the vagaries of Mother Nature are nothing compared with the sharemarket war for control of the company he has managed for 10 years.

In the middle of both tempests, Mr Hubscher sits, smiling wryly.

While the prospect of either Lion Nathan or Allied Domecq owning Montana could mean huge upheaval for him personally, his main concern remains how best to expand the combined businesses of Montana and recent $151 million acquisition Corbans Wines.

As PricewaterhouseCoopers has pointed out in numerous reports to Montana shareholders, buying Corbans was the most significant event in the company's recent history, present sharemarket shenanigans notwithstanding.

The purchase boosted Montana's domestic production 70 per cent. It now owns 57 per cent of the local market by volume and is responsible for 49 per cent of all wine exports.

The fortunes of Montana also blaze a trail for many of New Zealand's 380-plus small and medium-sized winemakers in a competitive global market.

Mr Hubscher says the psychological pressure of the merger has also been significant.

"The hardest thing I did shortly after the merger was announced was to wear a [Corbans] Stoneleigh labelled T-shirt," he says.

"We've been competitors for years. We had been fighting the 'enemy.' Personally wearing those brands ... was initially quite difficult."

The speed of integration was another difficulty, but otherwise, it has gone smoothly, he says.

The combined firm employs 800 fulltime staff and 300 casual workers when the seasons demand, and manages 2400ha of vineyards, with a similar amount again in vines that are harvested for the Montana label.

About 44 million litres of wine are made each year, equivalent to 161,000 bottles a day.

Plans for Corbans have not fully unfolded yet, but swallowing the brand has allowed for an open-ended valuation of Montana (its worth goes up with each independent valuation ordered, largely because of "synergy gains not yet realised" from the Corbans purchase).

The future of Corbans brands is uncertain. Mr Hubscher says the big brands, such as Corbans, Robard & Butler and Stoneleigh, will remain but the portfolio as a whole will be trimmed.

Labels will be revamped, with designs strong on New Zealand and Maori symbolism.

The total cost of integration, including some redundancies, has come in under-budget at roughly $9.5 million, with synergy benefits pegged at $2 million this year.

Montana's profit after tax of almost $27 million last year, without the contribution of Corbans, is forecast to reach just over $85 million in 2005 - annual growth of 27 per cent.

Corbans' former owner, the Dutch-owned DB Group, was advised to hive off the company when it became clear that problems with distributing the product in Britain were ongoing. Montana, whose biggest and perhaps most unsatiated export market is Britain, is a natural conduit.

But DB's problems beg a timely question: can a brewer adequately run a wine company?

Mr Hubscher says managing a wine company is very different from running a beer company.

"When people have concentrated on investing in other companies and not trying to run them, they've had more success."

He says Montana's future chief executive, "whoever that may be," needs to do what he has been doing - although most observers acknowledge it may be hard to find someone who has been with the company almost 30 years, from entry-level to manager of the coveted asset.