Sober approach to wine trade

By DITA DE BONI

In all the years Peter Hanbury Masfen has been a director of Montana Wines - stretching back to the early 1970s - there has never been so much as a snifter of wine at the company's board meetings.

Sure, wine is consumed with guests and visitors, on road-shows and in show-rooms, but the six-hour board meetings each month are completely dry.

Mr Masfen sees that as a sign of a company run on sound business principles.

Others see it as the perfect illustration of the management style of Montana's chairman. The one-time King's College prefect and 1964 Olympic rowing representative could never be described as ostentatious, although he reportedly once bought his neighbour's house and demolished it to make way for a tennis court.

Under the spotlight this week, enmeshed in a takeover tussle with Lion Nathan for control of Montana, Mr Masfen refuses, for now, to talk about his motives.

Presumably, he hopes to prevent the brewer buying Montana too cheaply.

Whatever the reason - and where Mr Masfen would find the $253 million needed to lift Masfen Holdings' 20 per cent stake in Montana to 51 per cent - are closely guarded secrets.

As he says: "I just like to get on with things, live my life, and keep my head down somewhat."

The 59-year-old, who was born in Auckland and still lives in Parnell, sits on the board of a slew of companies - most notably, he is chairman of Montana Group and its major shareholder, Masfen Holdings - and is a member of the Business Roundtable. The Government recently appointed him to sit on the Apec Business Advisory Council with fellow corporate high-flyer Wendy Pye.

The latest NBR Rich List estimates the father of three to be worth $90 million.

Yet few have been up close and personal. Brokers report talking to him and gleaning no real insight; others think he is too much of a bean counter. He eschews flamboyance. He has shaped this country's wine industry for 30 years, but seems more interested in production capacity, shelf space, returns and export drives than the complexities of a cabernet.

One gets the impression that his low profile is partly a result of a concerted effort to stay away from the limelight, and partly the reflex of a man prone to shyness.

He admits as much. Montana annual meetings, which regularly draw up to 600 shareholders, present a challenge.

"I'm not saying I don't admire people who elect to have a higher profile: I admire them and respect the fact they are prepared to put their head up and say what they think and this country needs more of them. [But] I've elected not to do that so much: I'm a family person, and I've had quite a lot of challenges in my life - it's horses for courses."

Mr Masfen has chosen a strange line of work for someone who would prefer to keep his head down. His particular acumen is investment, the running of public companies, and maximising shareholder return.

And he has been involved with some high-profile businesses, including Aquaria 21, Auckland International Airport and Ports of Auckland.

The genesis of his family's involvement with Montana began with Ralph Porter - a rowing coach, principal of the accountancy firm Porter, Wigglesworth and Grayburn, and eventually Mr Masfen's father-in-law.

In the late 1960s Mr Porter became a shareholder in Montana. Mr Masfen was hired at PWG, which worked for Montana and helped with the purchase of 45 per cent of Montana by American liquor concern Seagram in 1972.

The proceeds of that deal were used for Montana's first plantings in Marlborough. When Mr Porter died in 1973, his estate sold his Montana shares to Mr Masfen "because it was a liquid asset - if you'll pardon the pun" and he became a director.

In the mid-1980s, he retired from accounting and formed a public company called Corporate Investments Ltd (CIL), which was listed through a reverse takeover of Collingwood Holdings. Its earliest investments included Montana.

"We had too many companies trying to be the largest wine company - you could summarise it as the wrong people, planting the wrong grapes in the wrong areas," says Mr Masfen.

"Needless to say, Montana wasn't one of those. I knew in this environment that Seagram, which was a big public company, would probably find [it a] difficult [environment] to see a path through."

In 1986, Seagram was approached by other liquor industry participants wanting to buy the company's holding. What followed was a dramatic turning point for CIL. It was given 10 days to raise $10 million and buy Seagram's Montana shareholding. It found the money.

Subsequently, the wine industry underwent massive change, with the Government lending it $10 million to rationalise itself.

Montana bought Penfolds New Zealand from Lion, while Cooks and McWilliams Wines and Corbans merged into one. Corbans and Montana have since become one, leaving Montana the only major player going into the year 2001.

While Montana has provided a positive contribution to CIL - now Montana Group - over the years, other forays have not been so fertile.

Mr Masfen describes an investment in property development in Australia in the late 1980s as a "most unfortunate experience." He chalks it up to the "entrepreneurial exuberance" of that decade.

He also admits holding on to some of the smaller businesses too long.

"If you spend time with people and build something up, you get attached very often. So, sure, there's a risk of emotional attachment, but I believe that I'm pragmatic enough."

The words "pragmatic," "sensible" and "conservative" are descriptions with which he is comfortable.

"Although, if you take the involvement with Montana, that's required a fair bit of faith over the years in terms of investment because it's an industry that's young, it's had promise ahead of it, [and] we've done things that have taken years to prove whether they were right or wrong."

Mostly, they have been right. In the last full financial period, after-tax profit doubled to $48 million on $448 million of sales. Montana shares - ratcheted up in part by Lion Nathan's interest - have climbed steadily to $3.80 from less than $2.00 at the beginning of this year.

"I've never been a trained winemaker, never pretended to be. And I think that's a bit of an advantage in a way, because wine is an industry that you can get almost emotionally involved in at the cost of making clear-cut commercial decisions."

Philip Gregan, chief executive officer of the Wine Institute, says Mr Masfen's contribution to the industry over the past 15 to 20 years has been significant.

"You've only got to consider that Montana was one of 20 similar-sized wineries 20 years ago, and it now has 60 per cent of the market. That speaks for itself."

John Maasland, Wilson & Horton chairman and a friend of Mr Masfen, says Mr Masfen is a "clear-thinking, committed person who has done a lot for New Zealand export business."

While Mr Masfen continues to be committed to boosting New Zealand's export opportunities abroad, it is clear that home is where his heart is. Increasingly, that means a Bay of Islands property he is developing.

"New Zealand's future, I still believe, is in adding value to our primary produce, and certainly the wine industry is a classic case where we are adding significant value in quality marketing and management skills to a resource we happen to grow."