New Zealand's top vineyard is embroiled in a bid battle and Californian wine estates are coming under scrutiny. The world's top two spirits giants, Diageo and Allied Domecq, are scanning the world for wine companies to swallow, while Australasian brewers Foster's Brewing Group Ltd and Lion Nathan Ltd are also turning to vineyards and wineries. Diageo, the Johnnie Walker whisky and Smirnoff vodka company, is searching Australia, California and Chile. Allied has its focus on Australia and New Zealand, while France's Pernod Ricard is as yet the only successful European company down under with its Jacob's Creek brand. Yet the wine industry projects a mixed picture.
Global consumption is broadly flat while production is in long-term decline.
In addition, production exceeds consumption by around 20 per cent, putting downward pressure on prices. The bright spots for production are in the New World, with demand high for wine from Australia, Chile, the United States and South Africa. On the consumption side the growth areas are Britain and the United States, the top wine importers. The key for the big drinks companies is producing premium wines at a low cost - which can be branded. This makes New World vineyards the most attractive to buy, while British and US drinkers have clearly developed a taste for the new wine styles.