Coke, Casella plan a beer venture. . . but wine’s out

Blair Speedy
February 14, 2013
The Australian

TERRY Davis may like a beer, but he draws the line at wine.

In an exclusive interview, the Coca-Cola Amatil chief executive sets out his plan for ensuring CCA’s continued growth long after he has left the company through a beer joint venture with privately held wine group Casella.

The move will see Mr Davis go toe-to-toe with his former employer Foster’s, as well as CCA’s former beer joint venture partner SABMiller, which acquired Foster’s in a $12.3 billion deal in 2011.

CCA is the perfect fit for beer, he says, with its existing soft drinks business providing massive distribution capability and more than 1000 sales staff who can saturate the market.

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

The company’s aim is to poach international brands from Lion, the country’s largest brewer, and produce them under licence in a brewery being built by Casella with the help of a $46 million investment from CCA.

But Davis, who ran Foster’s wine business before joining CCA, says there is no chance the company would make a tilt at Treasury Wine Estates, the former Foster’s wine division.

“Not in my lifetime . . . having worked in the wine industry for such a long time, and luckily in a wonderful period for the industry, but also 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 says.

“I think it suits owner-occupiers and private equity that can take the good years and the bad years, but in corporate life as we know you’re OK in the good years but out in the bad years.”

Davis says he has some regrets about the 2005 acquisition of fruit processor SPC Ardmona, which slashed hundreds of jobs as the surging Australian dollar cut off export markets.

“At the time, the dollar was at US70c and it was all looking fine – nobody could foresee that the dollar was going to be $US1,” he says.

“I guess what I regret most was that we should have restructured earlier. The business cost base was too high, it had too many production facilities, and then the retailers started to be aggressive on their own private labels imported from Greece and South Africa and China.”