Brewer’s Purchase Was Major Coup

Press, Volume CIX, Issue 32119, 15 October 1969, Page 1

Brewer’s Purchase Was Major Coup

fßg the commercial editor) The take-over last week of the South Island Wine and Spirit Company, of Riverton, was a major coup by Dominion Breweries, Ltd, greatly enlarging the Auckland company’s previously modest foothold in the South Island.

( By taking over the . Riverton co - operative wholesale firm, Dominion ‘ Breweries has secured a ’ market for its lines in nearly 150 hotels in Southland, Otago and Canterbury at the cost of issuing an estimated 70,000 Dominion Breweries shares. For many years Dominion Breweries lines of bottled beer and lager have been popular in the South Island; but until the company’s recent acquisition of Westland Breweries, Ltd, and Harley’s brewery at Nelson it did not manufacture in the South. The strengthening of its market in Otago and Southland seems likely to lead to Dominion Breweries establishing a new plant in the south of the South Island. 148 MEMBERS Dominion Breweries won 100 per cent acceptance of its terms for acquiring the South Island Wine and Spirit Company—a co-operative of 148 independent hotels. These members of the co-operative receive Dominion Breweries shares in return for their interests in the wholesale business. Each hotel had $BOO worth of shares in the-'co-operative and enjoyed a rebate on purchase from the cooperative. This rebate came from the profits of the co-operative. Dominion Breweries will continue the rebate in a modified form and in return for this the hotels undertake to channel 75 per cent of their purchases of wines and spirits through Dominion Breweries subsidiaries. In addition to the co-operative. Dominion Breweries has also bought wholesale businesses in Christchurch and Dunedin.

> The hotels will also be , able to take advantage of the ' rebate on bottled beer pur--1 chases. Until Dominion Brew--1 cries can expand its brewing t facilities in the South Island, and place them more strategically, the pattern of I draught beer sales is not ; likely to change substantially. | Ordinarily, to create such a favourable market for its ' products, a brewery has to invest heavily in hotels. This arrangement appears to have ! cost Dominion Breweries very 1 little and gives the company 1 direct access to about 13 per cent of the country’s hotels ’ in areas where it previously seemed to have only a steady 1 future. To secure its South Island position Dominion Breweries i has had to do little more than : Issue about 70,000 of its i shares to hotel owners (assuming that each owner re-1 ceived about 500 shares in ex- j change for his co-operative 1 membership). Dominion ’ Breweries shares are quoted 1 on the stock exchanges at i

174 c. The company has been paying a dividend of 12J per cent. MAIN COMPETITORS Apart from the wine and spirit merchants, the main competitors in the supply of liquor in the South Island are New Zealand Breweries, Wellington based, and with major plants in the South Island, and Ballins Industries, of Christchurch. The latter draws its beer supplies from New Zealand Breweries, is a major force in the sale of wines and spirits and nonalcoholic beverages, and is the biggest hotel-owning company in Canterbury. The wine and spirit trade generally disapproves of trade rebates. The Riverton. co-operative has extended its rebate to its retail members . for several years. One early result of the ■ brewery take-over seems to , have been the ending of the , liquor price war in Dunedin, , where many hotels are linked with the new branch of Dom- j inion Breweries.