Beer and wine don’t mix
Australia’s number two brewer Lion has sold its Australian premium wine business to Accolade Wines for reportedly close to AUD 100 million, thus ending a costly expansion into wine which began in the early Noughties.
Kirin-owned Lion, which also has beer brands including Toohey’s and Dairy Farmers milk, has divested the Petaluma, Croser, St Hallett, Knappstein, Stonier and Tatachilla brands, four Australian wineries and distribution networks, but will retain its New Zealand and US wine businesses, it was reported in November 2016.
Lion, which reported revenues totalling AUD 2.4 billion and operating earnings of AUD 406.1 million in the first half, still holds substantial wine assets in New Zealand but its Australian base now is led by beer and dairy.
Like its rival Foster’s, Lion paid huge multiples to enter the wine industry, which many thought at the time faced rosy prospects, not least thanks to the allure of New World wines globally. Lion forked out AUD 229 million for the Petaluma operations alone in a takeover in 2001 and then made further acquisitions along the way, but like Foster’s has always struggled to reap decent returns on wine.
After shareholder discontent, Foster's split off its wine unit Treasury Wine Estates (TWE) and listed it on the stock market in 2011 before selling itself to SABMiller. After some early wobbles, media say, TWE has been a strong performer since early 2014 when CEO Mike Clarke took over.
Lion’s wine labels fit neatly into Accolade’s portfolio which has shown some gaps at the premium end. Accolade Wines is 80 percent controlled by the private equity firm Champ, which is said to consider an exit next year, most likely through a stock market listing. The only trouble is that Accolade generates about half of its revenues from Britain and suggestions have emerged in recent weeks that the sales process for Accolade had been delayed because of the volatility of the pound caused by Brexit.
