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Realities spill into the world of wine

Sean Robson

'Lunch is for wimps.' When Gordon Gekko (played by Michael Douglas) uttered those immortal words in 1987's Wall Street it was indicative of the cut-throat, fast-moving, wheeling-dealing nature of New York's stocks and bonds industry. Well, that was last century.

This decade, the mantle of fast-paced, dynamic corporate life firmly belongs to the global wine industry. And the activities at Australia's Southcorp Wines provide as much drama and compulsive viewing as any movie.

Take the past two years. In October 2000, Southcorp owned major brands Lindemans, Penfolds and Wynns. At about the same time its major competitor, Rosemount, agreed to partner California's Mondavi in a Trans-Pacific joint venture.

But things behind the scenes were moving fast. Almost immediately, Rosemount and Southcorp shocked the wine world by announcing a planned merger. The Mondavi deal was put on the back burner. The Australian wine industry continued to watch in amazement as the Southcorp board announced that Philip Shaw, head winemaker at the much smaller Rosemount, would become tchief winemaker, overseeing all of Southcorp's brands.

John Duval, who was Southcorp's man, was asked to concentrate on Penfolds alone. At the time, Duval was the third man ever to have responsibility for making Grange, Australia's undisputed flagship wine. 'What a kick in the teeth to this most respected of winemakers,' many industry insiders said. 'It will only be a matter of time until someone else snaps him up.'

As predicted, next month Duval will part company with Southcorp to pursue his own winemaking interests, although he will remain as a consultant to Penfolds. Peter Gago becomes the head winemaker.

I met Gago in Hong Kong earlier this year. A quiet, modest man, he enjoys lunch and bears no resemblance to Gordon Gekko. Once a maths and science teacher, Gago has written three textbooks on wine and under Duval's leadership, has been Penfolds' red wine oenologist since 1994. Much of his time recently has been spent promoting Grange and other Australian wines to consumers around the world.

While Southcorp's human-resources department has been sorting out severance packages, their colleagues in 'mergers and strategic alliances' have been quietly beavering away. The joint venture deal with Mondavi is back on.

The two companies will jointly develop two ranges of wine, one in California and one in Australia. Ian Shepherd has been appointed winemaker and will oversee two vintages a year. This certainly is global winemaking.

The first wines will hit the shelves in February 2003. The Californian wine will be marketed as Talomas and consist of two blended wines, a 2000 cabernet/merlot and a 2000 cabernet/shiraz. A third blend of chardonnay/viognier will be launched later in the year.

Meanwhile, the Australian wines will be known as Kirralaa and will be sold as straight varietals. The range will consist of chardonnay and merlot from the 2002 vintage and cabernet sauvignon and shiraz from the 2001. These wines should retail in Hong Kong for less than $200 a bottle.

However, to follow in the footsteps of all the other Mondavi joint ventures, by late next year there will also be two top- end wines available. To be known as the Talomas Syrah Reserve 2000 and the limited production Kirralaa Shiraz 2000, they are slated to join the same super premium category (above $600) of Opus One, Sena and Luce, and they may well become Christmas 2003's 'must-have' corporate gifts. If they don't, heads may well roll.

Time and marketing are money in this fast-moving global wine business. If the per earnings ratios don't stack up and shareholder value is compromised, lunch may become history in this still most congenial of industries.

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