Australian winemaking giant Southcorp today announced a major restructuring as a response to a drop in global wine prices in 2003.

The producer of Penfolds, Lindemans and Rosemount will cut 190 jobs, close two wineries, two packaging units and six distribution centres said a Southcorp press release.

Chief Executive John Ballard said that Southcorp, Australia’s second biggest winemaker, was cutting costs in production and distribution.

‘The major opportunity to realise efficiencies…is in rationalising packaging and distribution where Southcorp has an uncompetitive cost structure,’ he said.

The review is predicted to deliver an extra A$27m per year in pre-tax earnings by 2008.

Southcorp will concentrate packaging, distribution and winemaking in two centres: the Karadoc winery in Victoria’s Sunraysia region and the Nuriootpa winery in South Australia’s Barossa Valley.

At Rosemount, chief winemaker Jim Kirkpatrick described the move as a hard decision but one that looks to a positive future. Peter Orr, president of the Upper Hunter Winemakers Association called it a blow for the local community.

Southport shares dropped 3.6% to AUS$3.26 after the announcement. The shares have gained 21% during this year.

Written by Jack Martin