Australian Wine Holdco completes Accolade Wines, Pernod Ricard wine merger

Australian Wine Holdco has flagged a restructure of its expanded portfolio after finalising a mega merger of Accolade Wines with Pernod Ricard’s wine division.

Jacob's Creek is one of three flagship brands brought together as part of the merger of Accolade Wines with Pernod Ricard’s wine businesses.

Private equity backed Australian Wine Holdco (AWL) has formalised its merger of Accolade Wines with French drinks giant Pernod Ricard’s wine businesses, flagging a restructure of its expanded portfolio as part of a premiumisation push under its flagship labels.

The merger took effect on Wednesday, nine months after the French drinks giant agreed to sell its global wine division to the international consortium of investors led by Bain Capital.

The merged company will be known as Vinarchy – combining Vin (the French word for wine) with Archy (from the Ancient Greek word for leadership), with its headquarters in Adelaide.

Bringing together 11 wineries across Australia, New Zealand, South Africa and Spain, Vinarchy has emerged as one of the world’s largest wine companies, producing more than 32 million cases annually, generating annual net sales revenue of more than $1.5bn and employing more than 1600 staff globally.

While acknowledging the challenges facing the industry as global wine consumption continues to decline, Vinarchy executive chairman Ben Clarke – previously executive chairman at Accolade – said the scale of the combined group would enable it to drive future growth under its three flagship brands – Hardys and Jacob’s Creek in Australia and Spain’s Campo Viejo.

“There’s no question that there are challenges for the wine industry around the world, and that’s why we’ve chosen to bring these two companies together,” Mr Clarke told The Australian on Wednesday.

The St Hugo cellar door in the Barossa Valley.

“Our three biggest brands are Hardys, Jacob’s Creek and Campo Viejo in Spain, and those three brands alone generate over $2bn of consumer sales every year. Our focus is going to be very much on accelerating the growth of those brands globally.

“Inevitably we will prune some of the portfolio to make sure that we can focus the majority of our resources on those advantage brands. The impact on revenue, in this early phase of pruning is less than 5 per cent so it’s quite small.

“What we want to do is confirm the growth plans for the advantage brands before we confirm what we’re going to do with the rest.

“We’re very pleased that the new portfolio we have allows people to buy wine at every price point ... but there is undoubtedly that trend towards premiumisation and we’re keen to further develop that. And you will see, going forward, more efforts within our existing brands to create more higher quality, premium formats and products.”

Pernod Ricard’s wine sell-off includes Australian labels Jacob’s Creek, St Hugo and Orlando, New Zealand’s Stoneleigh and Brancott Estate, and Campo Viejo, Ysios and Tarsus out of Spain. They join brands on the Accolade side of the group including Hardys, Grant Burge, Banrock Station, St Hallett and Petaluma.

The deal consolidates AWL’s position as one of Australia’s largest wine groups alongside rival Treasury Wine Estates.

Pernod Ricard was one of the earliest foreign investors in Australia’s wine industry when it snapped up Jacob’s Creek and Orlando Wines in 1989.

Accolade Wines executive chairman Ben Clarke. Picture: Jessica Hromas

However as one of the biggest selling Australian wines into China, Jacob’s Creek was hit hard by three years of Chinese tariffs.

The latest figures from Wine Australia, released on Tuesday, show that Australian wine exports to China surged past $1bn in the first full year of trade since those tariffs of up to 218 per cent were lifted in March last year, only slightly behind the pre-tariff peak of $1.2bn.

Mr Clarke said the return of the Chinese market was good news for Australia wine producers, but Vinarchy was also exploring opportunities to diversify distribution into other emerging markets across Asia.

“We have a rapidly growing business in China, but I would say because of the combination of the two businesses now, that’s being supplemented with fast-growing businesses in Japan, Korea, North Asia and Southeast Asia,” he said.

“We’re pleased that our Asian footprint has become more diversified. It also now includes India, and Pernod Ricard has a strong presence in India with Jacob’s Creek. We’re looking forward to really accelerating the growth of that brand.”

Mr Clarke said it would take at least year to “properly bring the companies together”, before it considered further acquisitions.

“We are big believers in wine, we are totally focused on wine,” he said.

“We’re very proud of the fact that this company is only going to focus on wine, unlike many other drinks companies around the world, and we will be looking at other wine assets to acquire, but not for the next 12 months or so.”

Mr Clarke said all Accolade employees and most Pernod Ricard staff would transition to Vinarchy, while some staff would remain with the French company, which will continue to operate its spirits and champagne brands, including Absolut vodka, Ballantine’s, Chivas Regal, Havana Club rum, Beefeater gin and Malibu liqueur.

Vinarchy is in “advanced stages” of selecting a chief executive to oversee the group, with Mr Clarke set to transition to non-executive chair.