Grape and Wine Sector Regulatory Impact Analysis

18 October 2024

Grape & Wine Regulatory Impact Analysis

Dear Dr Emerson

Pernod Ricard Winemakers welcomes the opportunity to make a submission to the
Grape and Wine Sector Regulatory Impact Analysis and we are pleased that this important work is underway. We would be happy to meet with you to expand on the following.

Pernod Ricard Winemakers is the premium wine division of Pernod Ricard and owns iconic Australian wine brands, Jacob’s Creek, St Hugo, Orlando and George
Wyndham. We employ around 800 people nationally, with our manufacturing base in the heart of the Barossa Valley, where we also have cellar doors for Jacob’s Creek and St Hugo. Headquartered in Paris, Pernod Ricard employs 18,500 people globally and sells premium wine, Champagne and spirits in over 160 countries.

As you will be aware, Pernod Ricard has signed an agreement to sell its wine business and assets across Australia, New Zealand and Spain to Australian Wine
Holdco Limited (AWL) for merger with Accolade Wines. Under the sale agreement, we have committed to delivering results for the wine business and we want to see the industry thrive. We see this as an opportunity for the merged global wine business to have a dedicated route to market. The Mumm Terroirs sparkling wine portfolio
(including Mumm Tasmania in Australia) and Champagne, spirits and RTD portfolio will remain owned by Pernod Ricard. We note that regulatory approval for this sale has not yet been obtained and closing of the sale is expected in 2025.

As an active member of Australian Grape & Wine Inc (AGW), Pernod Ricard
Winemakers supports AGW’s submission and we wish to highlight the following points.

• Wine is a single source agricultural product where the full value chain from
grape to glass resides in Australia. This is a unique characteristic when
compared to other agricultural products. A healthy margin structure across all
parts of the value chain is essential for the sustainability of the sector and the
contribution it makes to Australia. Australian wine must compete

Level 43, Tower One, 100 Barangaroo Avenue, Barangaroo Sydney NSW 2000
PO BOX R566 Royal Exchange 1225 Phone +61 2 8874 8222
Pernod Ricard Winemakers Pty Ltd • ABN 75 007 870 046
www.pernod-ricard-winemakers.com
internationally overcoming hurdles such as the tyranny of distance against
competitors who enjoy significantly advantageous financial incentives.
• Due to the grape oversupply, and retailer consolidation, there has been very
little pricing uplift for commercial wine over the past 15 years. The price of
Jacob’s Creek Classic is very similar to what it was 10 years ago despite the
increase in the cost of materials, freight, insurance and energy. During the
same period, other products have passed on significant costs while
commercial wine has remained at a stable price.
• Where AGW has referenced Australia’s merger regime, we support this
statement in the context that there are concerns in the industry that retailers
have been allowed to acquire wineries and vineyards, thereby concentrating
more market power in these vertically integrated retailers. We do not support
any further restrictions on Australian M&A laws.

Level 43, Tower One, 100 Barangaroo Avenue, Barangaroo Sydney NSW 2000
PO BOX R566 Royal Exchange 1225 Phone +61 2 8874 8222
Pernod Ricard Winemakers Pty Ltd • ABN 75 007 870 046
www.pernod-ricard-winemakers.com