Lion Nathan Buys Premium New Zealand Winery

The beer-and-wine company acquires Wither Hills, a producer of Pinot Noir and Sauvignon Blanc, for $26 million.

Bob Campbell
Posted: September 4, 2002

Brewer Lion Nathan has purchased Wither Hills, a reputable producer of Marlborough Pinot Noir and Sauvignon Blanc, for US$26 million, the third highest price ever paid for a New Zealand winery.

Since 2001, when Lion Nathan first entered the wine business, it has taken over a string of wineries in Australia and Oregon through its acquisitions of Petaluma Wines and Banksia Wines. Wither Hills joins a portfolio of brands that includes Argyle, a highly regarded Pinot Noir winery in Oregon, and Australia's Petaluma, Knappstein, Mitchelton, Stonier's, St. Hallett, Tatachilla and Hillstowe.

Last year, Lion Nathan -- which owns breweries in Australia, New Zealand and China -- made an unsuccessful bid to buy New Zealand's largest winery, Montana, which was eventually purchased by British wine-and-spirits giant Allied Domecq.

Although Lion Nathan paid a substantial premium for Wither Hills (the purchase price follows only those of Montana and Corbans, both larger companies), the acquisition gives the brewer a solid foothold in New Zealand's largest wine region. Included in the deal are nearly 1,000 acres of land in Marlborough, with 370 acres of established vineyards, and a recently constructed winery.

The purchase also provides access to three of New Zealand's most popular types of wine: Sauvignon Blanc, Pinot Noir and Chardonnay. Sauvignon Blanc and Pinot Noir have not achieved the success that many other varieties have in Australia, and Lion Nathan's Stonier's winery, in Mornington Peninsula, is the company's only source of notable Pinot Noir in Australia.

Wither Hills has enjoyed spectacular growth, with production at least doubling every year since 1996, when 500 cases of wine were made, up through the 2002 vintage, which produced 80,000 cases.

Wither Hills owner Brent Marris has accepted a three-year contract to manage Wither Hills. "It's business as usual," he said. "Lion Nathan is injecting some capital to allow us to expand production, but otherwise everything will remain pretty much the same." His father, viticulturist John Marris, was a shareholder in Wither Hills and will continue to manage its vineyards.

Lion Nathan's ownership should allow Wither Hills to return to the U.S. market. For the past three years, all of its wines have been on allocation, with the winery's three largest markets being the United Kingdom, Germany and Australia, explained Brent Marris. "We did sell wine to the U.S., but I withdrew from that market because we simply couldn't supply enough wine to satisfy our customers," he said. "I plan to relaunch into the U.S. shortly and am reviewing Lion Nathan's joint-venture distribution set-up in that market."

Wither Hills joins a growing list of New Zealand wineries that have been purchased by foreign companies. In addition to Montana, there are the Nobilo Group, now owned by Hardys of Australia; Matua Valley, owned by Australian-Californian giant Beringer Blass; and Cloudy Bay, owned by French luxury good firm LVMH. An estimated 75 percent to 80 percent of the wine made in New Zealand is now produced by wineries with overseas owners.

Check our ratings of Wither Hills wines.

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