One of these exciting stories – by which, let’s be clear, I mean M&A – dates all the way back to 2011, when Constellation Brands offloaded an 80% holding in its Australian and UK wine operations to private equity group CHAMP. The business was renamed Accolade Wines by CHAMP, which after seven successful years – buying at US$293m and selling at $770m is successful, right? – stepped back to be replaced by private equity peer Carlyle Group in 2018.
Enter stage left: Pernod Ricard, who by the nature of its multinational brand owner status always has our attention – even in wine. Our three musketeers are completed by Australian Vintage, whose publicly-listed status results in coverage on a half-yearly basis, at least, with regular indications of how the company’s performing (spoiler alert – not great).
I’m not singling out one of these three as having a tougher time than either of its fellow actors in this scene. Let’s not forget that Accolade needed to be rescued as recently as February from what it called at the time an “unsustainable balance sheet”. That rescue, which saw Carlyle hand over ownership to a company comprising five – you guessed it – investment companies, prompted upbeat noises from Accolade’s management, but there’s little doubt they’ll have also breathed a huge sigh of relief.
As for Pernod Ricard, the group’s recent performances have been steady and in line with the rest of the spirits industry. The performances of the likes of Brancott Estate, Jacob’s Creek and Campo Viejo, however, barely get a mention, come results season.
The backdrop to these travails – and one thing all three have in common to varying degrees – is the tough situation for wine producers in Australia. In the 12 months to the end of September 2022, the country’s wine exports slumped by 11%, followed by similarly depressing set of figures from the year to the end of June 2023 (-10%). The figures were the cue for the arrival of the dreaded ‘strategic review’ term at Australian Vintage in July, preceded two months earlier by the utterance of the phrase by Treasury Wine Estates – albeit for the group’s lower-priced wine brands.
All the while, speculation about Pernod Ricard’s wine intentions has surfaced metronomically for at least a decade – Provence’s Château Sainte Marguerite notwithstanding.
The lit match to this consolidatory pyre comes in the form of February’s confirmation that Accolade and AV are in negotiations over a potential merger. What makes this saga yet more colourful is the departure of AV’s CEO, Craig Garvin, with immediate effect last week. Could Accolade be leveraging the longstanding Pernod Ricard rumours to gain the upper hand in their ongoing discussions with AV?
The alignment of stars suggests not: AV is on the lookout for solid ground by necessity, while Pernod Ricard, I’m told, would gladly consider offloading much of its wine base if the price were right. As for Accolade, the Hardys and Banrock Station brands owner must also be craving stability for the longer term.
It looks to me, then, that there may be some incoming colour for the global wine industry this year. Just, make sure you’re stocked up on popcorn.
