Dr Vino's wine blog

On Sunday, Sideways won the Golden Globe for Best Film (Comedy or Musical) and Best Screenplay (Comedy or Musical). As well as being hailed by numerous critics as the Best Movie of the Year and receiving a composite score of 94 on Metacritic (harder than a Parker 94) it is likely to be on the short list for the Oscars. All this led A.O. Scott of the NY Times to call it the most “overrated” movie of the year.

I liked the movie but am surprised that it has found such praise among critics (though it has only about a tenth the box office take as the horribly reviewed Meet the Fockers $230 million).

Anecdotal reports thus far show that the movie is having an impact on wine choices. At wine shops that I have visited recently, staff members have told me that requests for Pinot Noir, the object of one movie character’s infatuation, are way up. There is hope that wine consumption more generally may benefit although with such a relatively weak box office, the impact may only “energize the base” in political parlance. Only 12% of the population drinks 86% of the wine in America and movies like Sideways make wine enthusiasts want to taste a flight of Santa Barbara’s Pinots.

But the wine country where the movie was filmed has experienced a boom with demand for tables at featured restaurants and featured wines outstripping capacity. Even the French wines featured are feeling the effect with one bottle of 1961 Cheval Blanc going for $750 on the wine auction site winebid.com. The rising tide lifts all boats? We can but hope wine in America gets a lift upward (not sideways!) from this film.

Southcorp, the struggling Australian wine producer, has rejected a A$4.17 a share take over offer from Foster’s, the brewer and wine maker, which values the company at A$3.1 billion ($2.35 billion) as “inadequate and opportunistic.” The market seems to agree having bid up Southcorp’s shares as high as A$4.50.

Has everyone had a little too much Shiraz?!?

Southcorp’s main brands have not been doing well as they have struggled to successfully integrate Rosemount since acquiring it in 2001 and resorted to in-store discounts to move that and some of its other brands. Now they expect multiple bidders?

There are only three other companies that could really be interested: Constellation (US), Diageo (UK), and Allied Domecq (UK). Constellation is unlikely to make a bid. Having already bought BRL Hardy–when the US dollar was much stronger–they already have good exposure to Australia. Further, they just gobbled up Robert Mondavi for $1.36 billion. Better to digest that one first.

Diageo could pay above the Foster’s bid. Formed by the merger of Grand Metropolitan and Guinness, the transaction size would not be big for this maker and distributor of wine, beer, and spirits with nearly $20 billion in annual sales. But given their global reach, would they want to hunt the wounded beast that is Southcorp? Certainly they did trump other bidders in their acquisition of Chalone last month.

Allied Domecq is probably the most likely rival to Foster’s. Their diverse holdings include Maker’s Mark bourbon as well as Dunkin’ Donuts and Baskin Robbins. So with wine in growth mode, if management wanted to add more wine to their portfolio, this is a big opportunity for them to do so. The currency is not such a negative factor as it would be for say Constellation since Allied Domecq is a UK company.

But many investment analysts say that Foster’s bid is a “mistake” and shares of Foster’s have traded down 10% on the news. Citigroup analyst Dawn Oldham in Melbourne values Southcorp at $2.90 a share. Further, a Foster’s acquisition would cannibalize sales of Foster’s existing Australian brands she says.

So the white knight that Southcorp’s chairman Brian Finn and the markets are anticipating may not arrive. The other big players may bet that Foster’s will drown in its own Shiraz.

My list of best wines from 2004 is up on DrVino.com. Find out not only which wines I thought were great values last year but also which made great pairings with top news stories.

Which wines do you think deserve gold medals?

Two days after acquiring a 19% stake in Southcorp, Foster’s has now made a bid for the whole company offering A$4.17 a share for the whole company, valuing it at A$3.1 billion ($2.35 billion). But Southcorp rejected the bid calling it “inadequate and opportunistic.”

Shares of Southcorp surged 11 percent in anticipation of a rival bid, most likely from Diageo or Constellation, both of whom made acquisitions just last month.

More globalization in the glass.

Wine is in growth mode; beer is not. That was the news from a story this week that showed beer sales in America declining while wine is growing.

Further confirmation of this trend comes from down under. Foster’s has announced that it has acquired a 19% stake in Southcorp through its purchase of the Oatley family’s stake in the company. The Oatleys sold their Rosemount winery to Southcorp a few years ago but the company, under their management for a time, has struggled.

Foster’s wine holdings in America, Beringer Blass, hasn’t exactly been setting the world on fire since they acquired it two years ago for $1.14 billion (A$2.5 bln). Although the group has attractive properties, growth has been below expectations and with the dollar’s decline against the Aussie dollar, the asset has not been a good performer. Shareholder appetite for growth through acquisitions has since waned.

Does misery love company? Apparently so. But if Foster’s follows through on this initial stake with an outright purchase of Southcorp, which is not certain with some analysts even expecting a bidding war, then the combined company would be the number one Australian producer and have a strong presence in the growing North American wine market. So they are essentially “doubling down” by taking a stake in another troubled wine maker, a high risk move, but chances are that they will execute this acquisition better through larger market power. The barrel always turns…

And the Americans sure do love that Shiraz and Chardonnay.

In a further sign of consolidation in the wine industry, the ailing Australian producer Southcorp may accept a takeover from the Australian wine and beer group, Foster’s. Southcorp’s brands include Penfold’s, Rosemount, Lindeman’s and Wynn’s. Shares of both companies have halted pending news.

“Spanish wine producers are up in arms after the foreign minister said Bordeaux was his favourite wine,” writes Decanter.

The head of the Spanish wine producers’ association, FEV, encouraged Miguel Ángel Moratinos to “remedy his ignorance” about Spanish wines. Poor guy. He doesn’t know what he’s missing! Dipomacy starts at home!

Wow, the idea of an endless harvest would really revolutionize the wine industry. Now to just try something besides Muscat! Story from India news

The area [Cumbum] is a major centre for grapes production with 4000 small farmers producing over 90,000 tonnes of Muscat grapes, locally known as “paneer dhrakshai”, and about 10,000 tonnes of Thomson seedless grapes.

The unique feature of the grapes grown here is that they are harvested throughout the year, as compared to other areas where the grapes growing season ends with the summers.