BRL Hardy continues U.S. wine push


This Australian Brokenwood shiraz was named the world's best red wine in 2001

By Geoff Hiscock
CNN Asia Business Editor

SYDNEY, Australia (CNN) -- Australian wine group BRL Hardy is continuing its push into the United States with the purchase of another California winemaker.

The move is through Pacific Wine Partners (PWP), the joint venture it set up last year with U.S.-based Constellation Brands.

BRL Hardy said Thursday that PWP would buy St Francis Winery, a 2000-tonne a year operation in California's Sonoma county. It did not disclose the price.

The stock market marked the company down after the announcement. Shares in BRL Hardy fell more than 3 percent to A$9.90 on the ASX near the close Thursday, its lowest price since last October.

PWP chief executive Jose Fernandez said the St Francis winery would be used to meet demand for wines under the Blackstone brand, the business the joint venture bought last October for about $150 million (Aust. $290 million).

BRL Hardy managing director Stephen Millar said Blackstone had "unlimited potential" in the U.S. and the Sonoma facility would help drive that growth.

On the acquisition trail

Last September, Millar confirmed the company was on the acquisition trail in the U.S. and would spend up to $300 million over the ensuing 12 months.

It spent about $114 million setting up the PWP joint venture as the vehicle for its U.S. expansion. The venture distributes wine brands from Australia, New Zealand and France in the U.S., along with wine from its wineries and vineyards in California.

BRL Hardy and other Australian beverage groups are targeting the U.S. at a time of consolidation and intense competition for global liquor asserts, with premium brands in high demand.

Australia's biggest beverage company, Foster's Group, spent $1.6 billion in 2000 to buy U.S.-based Beringer Wines. By combining its Australian and U.S. wine assets, it created one of the world's most profitable wine companies.

Its Australasian brewing rival Lion Nathan, which is 46 percent owned by Japan's Kirin Breweries, has also been in acquisition mode.

Targeting premium wines

In October it won control of the Australian premium winemaker Petaluma as part of its plan to build what it calls a "globally competitive Australian-based premium wine business".

The other major player is Southcorp, which spent almost $800 million in February last year to buy the premium Australian wine producer Rosemount, to add to its Penfolds and Lindemans brands in attacking global markets.

BRL Hardy's Banrock Station is becoming a familiar label in U.K. and U.S. markets, where it is looking to tackle the long-time frontrunner, Jacob's Creek, made by the French-controlled Orlando Wyndham group.

BRL Hardy international market manager Jim Humphrys told CNN that Banrock Station had the potential to be one of the world's top brands within 10 years.

Among Australian second-tier producers, McGuigan Simeon Wines has emerged as the frontrunner following agreement in February on a merger between Brian McGuigan Wines and Simeon. The new entity will process 180,000 tonnes of a grapes a year, behind only BRL Hardy and Southcorp.