Grape Expectations : a Case Study of the Southcorp-Rosemount Merger

The following case study illustrates the histories of two Australian wine companies, Southcorp and Rosemount, which merged in 2001 to become Australia's largest wine company. The two firms achieved notable success in their own rights, though through the adoption of very different operational and marketing strategies. We trace some of the strategic considerations driving the merger. We go on to discuss problems that have emerged in the months since the merger has been completed. These problems have emerged from both asset-related incompatibilities between the two firms, and a very difficult pricing environment in the merged firm's key markets. We discuss the potential benefits that the merger offers, including the potential for cost savings and the ability of the merged firm to harness its capital resources in the high-value adding areas of the wine industry - sales, distribution and marketing. Achieving these benefits will require new approaches to organisational structure internally and new and innovative supply relationships within the organisational and industry value chains.