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Wednesday 23 April 2014

Coca-Cola CEO snubs wine for beer

14th February, 2013 by Lucy Shaw

Coca-Cola Amatil chief executive Terry Davis has made it clear that the Sydney-based drinks company has no intention of making a bid for Treasury Wine Estates.

Coca-Cola Amatil CEO Terry Davis. Credit: The Australian

Coca-Cola Amatil CEO Terry Davis. Credit: The Australian

Speaking to The Australian, Davis, who ran Foster’s wine business before joining CCA, said he has no interest in buying TWA, the former Foster’s wine division.

“Not in my lifetime. Having worked in the wine industry for such a long time, and seeing the capital intensity and long-term decision making that has to be made in the wine business, I don’t think it suits corporates,” he said.

“I think wine suits private equity firms that can take the good years and the bad years, but in corporate life you’re okay in the good years but out in the bad years,” he added.

Earlier this week, Darren Rathbone, chief executive of the Rathbone Wine Group, told db that there is a lot of dead weight within Treasury Wine Estates.

Griffith, New South Wales, where the Casella brewery is being built. Credit: Richard Woldendorp

Griffith, New South Wales, where the Casella brewery is being built. Credit: Richard Woldendorp

“Penfolds would sell in a second, but there are a lot of sick brands in the Treasury portfolio and whoever buys it would have to take them all on,” he said.

Rather than snapping up TWE, Davis plans to ensure Coca-Cola Amatil’s growth through a premium beer venture with privately held wine group Casella, owners of the Yellow Tail wine brand.

The move will see Davis go head-to-head with former employer Foster’s and SABMiller, which acquired Foster’s in an AU$12.3 billion deal in late 2011.

“Coca-Cola Amatil is the perfect fit for beer, with its existing soft drinks business providing massive distribution capability and more than 1,000 sales staff who can saturate the market,” Davis told The Australian.

“It’s logical for us to be in that market as a full-service beverage company,” he added.

Davis aims to poach international brands from leading Australian brewer Lion and produce them under licence in a AU$46m brewery being built by Casella in Griffith, New South Wales, with the help of investment from CCA.

Australia’s largest drinks company, Coca-Cola Amatil was involved in Pacific Beverages, a joint venture with SABMiller, but sold its interest when SABMiller bought Foster’s in 2011.

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