Wine takeover expected to cut costs in hard times

Nick Hern and Eurowine's Brett Newell.

Relevant offers

One of NZ's largest wine distributors will be created by the takeover of Wellington-based Eurowines Fine Wines by Auckland-based Vintage Wines & Spirits. The merged company, to be called EuroVintage, is expected to sell about 500,000 cases of wine a year.

The merger is proceeding against a background of hard times in an industry squeezed between an international wine glut, forcing down prices, and tough economic conditions. Vintage managing director Nick Hern said the merged business would achieve economies of scale and could considerably reduce costs in areas such as distribution and marketing.

Both companies operated warehouses in Auckland and Hern said he hoped to have those operations relocated into a larger facility early next year. The new company would also have offices in Wellington, Christchurch and Queenstown. The businesses also had complementary strengths which, when combined, would grow market share, Hern said.

Eurowines was the distributor for many top-end wineries and was particularly strong in the service of restaurants and bars.

Vintage had a broader portfolio of New Zealand and overseas labels, and also distributed a small range of spirits.

Hern said the merged company would provide the country's most comprehensive wine range available from a single supplier.

EuroVintage will be a joint venture between Vintage, which is majority owned by Hern, and US-based Foley Family Wines, which owns Marlborough's Vavasour Wines, which Vintage distributes.

Eurowines has 22 shareholders and it is understood all have agreed to sell to the joint venture.

Eurowines was established by a small group of Wellington wine enthusiasts in 1983 and was initially a niche player importing small quantities of fine European wines.

Initially most of the company's customers were its own shareholders, but as the local wine industry developed, so did the business.

Eurowines chief executive Brett Newell said most of the original shareholders were still involved with the company although many were now retired, and the takeover would provide a convenient exit strategy for them.

Hern and Newell would continue to run the merged business as joint chief executives, with Hern concentrating on the retail trade and Newell overseeing on-premise trade. The merger will create a single distributor for many of NZ's most prominent wineries and some of the most successful imported brands.

- © Fairfax NZ News