Southcorp fired its chief executive on Monday, the latest sign that Australia's largest wine producer is struggling through rough financial times.
"The Board of Southcorp today announced that it has requested and received the resignation of Keith Lambert, Director and Chief Executive Officer, effective immediately," said a company statement. "The Board believes that different leadership attributes and business experiences are required to take the company forward."
The decision to fire Lambert was not about the company's overall business strategy, but about specific decisions made in the past year, according to Southcorp general manager Robert Porter. For example, he said, Southcorp had concentrated too heavily on its low-end, grocery-store wines in its two key markets: Australia and the United Kingdom. While those brands have sold well, they had limited profitability because of steep discounting.
Few, if any, of the company's low-end wines are sold in the United States, and the company has been moving away from that price point in general, eliminating bottlings and labels in recent years, Porter said.
"I don't think this means a thing to consumers in the U.S.," Tom Burnet, CEO of Southcorp's American unit, said of the firing.
Southcorp -- which owns well-known brands such as Penfolds, Rosemount Estate and Lindemans -- has been buffeted by financial challenges in recent months. Competition has been particularly keen Down Under and in the United Kingdom, where inexpensive wines from Europe have experienced a resurgence in popularity.
Publicly held Southcorp has seen the value of its stock plummet, and in January, it said earnings for the 2003 fiscal year could be 15 percent below its earlier predictions. Last week, Southcorp announced it is severing its partnership with Paragon Vineyard Co. in California and is writing down a loss of $17.3 million on assets over their joint label, Seven Peaks.
Brian Finn, chairman of Southcorp, will assume Lambert's duties until a successor is appointed. "The Board has directed management to focus on improving business performance through better product mix, lower operational costs and more effective promotional spending," Finn said.
Lambert, 47, became CEO of Southcorp in February 2001 when the company merged with Rosemount. He had been CEO and deputy chairman of Rosemount. His termination was particularly awkward since he is married to the daughter of Bob Oatley, Southcorp's deputy chairman. The Oatley family founded Rosemount, and Oatley remains Southcorp's largest shareholder.
Finn praised Lambert for successfully integrating Southcorp and Rosemount, but with the transition complete, he said, it was time for Lambert to move on. "We wish him well in his future endeavors," Finn said.
Read more about Southcorp: