Time may favor wine, but in business it can be a tricky adversary. Trevor O’Hoy, CEO of Melbourne-based Foster’s Group, knew he had to act fast when he learned in December that the Oatley family, the largest shareholders in Sydney-based wine group Southcorp, was considering a sale of its 18.8 percent stake.
O’Hoy flew to Sydney to huddle with Bob Oatley and his son Sandy, then gave up his Christmas to focus on the deal. “It wasn’t the best timing,” admits O’Hoy, a 28-year veteran of Foster’s who became CEO in March 2004. “But strategically, it was just too good to let slip.” Thus began O’Hoy’s ongoing pursuit of Southcorp, which, if successful, will make Foster’s the world’s biggest wine producer.
At the meeting O’Hoy and the Oakleys eschewed such beverage options as Southcorp’s Penfolds, Lindemans and Rosemount wines -- or Foster’s Wolf Blass, Yellowglen and Jamiesons Run brands -- in favor of mineral water as they discussed their shared belief in Australian ownership and the promotion of what they call “Brand Australia.” The biggest new-world wine exporter, Australia ranks fourth globally, after Italy, France and Spain. In 2003'04 exports totaled 585 million liters valued at A$2.5 billion ($1.9 billion).
After buying the Oatley holding, O’Hoy last month launched an A$2.52 billion bid for the rest of Southcorp, stunning market analysts. Until then the CEO had been talking up a plan to improve cost efficiencies at existing operations for at least another year.
The Southcorp board rejected the initial offer as too low, leaving the deal open to other players. O’Hoy says he’s not intimidated by such foreign giants as France’s Pernod Ricard and the U.S.'s Constellation Brands. “You don’t go into business based on negative thoughts,” he says, adding that Foster’s stands to gain the most from product synergies. “We want to keep the brands here and take on the rest of the world.”
