Lion attacks wine block

Press, 28 December 1985, Page 21

Lion attacks wine block

PA Wellington Attempts by the Lion Corporation, Ltd, to help the wine industry have been thwarted by the Commerce Commission, Lion’s managing director, Mr Douglas Myers, said in the company’s half-year report. He says the misfortunes of the New Zealand wine industry, which was overplanted and over-capi-talised, showed over-protec-tion by the previous Government had been counter-pro-ductive to building up a strong domestic wine industry. “During that same period the brewing industry suffered from over-regulation, rather than over-protection, which had the effect of stultifying growth, ambition, and market responsiveness,” Mr Myers says. “We have emerged from that depressing period with a determination to solve quickly the problems we are confronted with, and put them behind us. “However, our attempts to assist the wine industry have been thwarted so far by the Commerce Commission, in what we regard as the mistaken belief that competition in the wine industry can be artificially protected. “This ignores the fact that competition can only take Clace on a sustained basis etween profitable organisations. “Unless the major problem of bringing the supply of grapes into balance with demand is confronted, the New Zealand wine industry will face C.E.R. in very poor shape.” Mr Myers says Lion’s better performance recently has resulted from lowering costs and improving operating efficiency and margins. The profit performance for the latest six months ended Septemeber 30 was further evidence that the return to its core business was correct. “The overdue readjustment of the economy and implementation of more realistic Government policies is causing difficulties for many companies operating in the New Zealand industrial sector,” he says. But Lion was using the tougher conditions to improve productivity and customer service. Lion’s restructuring decisions made in 1983 were being “confirmed beyond doubt” by the tight business conditions which the company was handling comparatively well, Mr Myers said. Lion was determined to survive as an internationally competitive company. It was under pressure on the domestic market from Australian competitors as they imported increasing quantities of canned beer under a favourable exchange rate. But Lion had no objection to free and fair competition, as it was fundamental to the more open trading environment it had sought from the Government in the past.