AUSTRALIAN GIANTS SELL OFF ASSETS

Published: 23 July, 2008

By Jack Hibberd

Two of the biggest names in the Australian wine industry - Southcorp and Beringer Blass - are selling wineries and distribution centres in their twin drives to cut costs in the face of falling profits. Southcorp's new production and distribution blueprint' will save the company around A$28 million and see around 200 workers lose their jobs. Two wineries will be closed or sold: Yenda winery, near Griffith, and Waikerie winery, in Riverland. Nuriootpa winery in the Barossa will expand its production facilities. Southcorp's four packaging centres will be consolidated into two - at Karadoc winery in Victoria and at Nuriootpa (the home of Penfolds) - and its nine distribution centres reduced to three. CEO John Ballard, who took over the company last year following a 95% fall in profits, said these moves were the best way to realise efficiencies while maintaining the high quality of our wines.' The Beringer Blass programme of cost-cutting reportedly involves the sale of nine of its vineyards across Australia - such as a 100-hectare holding in the Hunter Valley - and the disposal of three wineries and packaging facilities in Victoria, including the 3,000-ton Yarra Glen winery in the Yarra Valley. There are no details of potential job losses. Beringer Blass's parent group Foster's wrote down the value of its wine arm by A$300 million last month, following a 28% fall in earnings. The Australian cost-cutting, together with similar moves in California, is expected to save the company A$60 million a year.

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