Issue No. 65 - June/July 2012
Investing in wine as dollar subsides
by Zac Zacharia
South Australia produced 47% of Australia’s wine in 2010 - almost 474 million litres of wine.
We are also the seventh largest wine producer; as well as consuming nearly 500 million litres of our wine each year, Australia is also the fourth largest wine exporter in the world at 703 million litres a year, earning nearly $2 billion per year for Australia’s economy.
Australia’s Top 5 largest wine producing companies (according to The Australian) are:
1) Accolade Wines (controlled by CHAMP Private Equity)
2) Treasury Wine Estates (listed on the ASX)
3) Casella Wines (family owned)
4) Pernod Ricard (listed in France)
5) Australian Vintage (renamed McGuigan Simeon, and is listed on the ASX)
The high Aussie dollar has hurt all Australian exporters in recent times, including winemakers, but there may be a silver lining emerging: the recent decline in the Aussie dollar has given wine exporters some confidence they can start to profit from export markets again.
It is interesting to note that in 2001, there were about 25 wine companies listed on the Australian Securities Exchange – so many in fact that it was widely recognised there was a ‘Wine Sector’! Since then more than 20 listed wine companies have disappeared from the market, primarily due to consolidation among players as winemakers sought economies of scale by buying out their competitors. Today, just three names remain on the ASX: Treasury Wine Estates, the former wine arm of Foster’s, Australian Vintage and Brand New Vintage - which no longer owns any winery, vineyard or even brand assets after selling them all to Chinese investors for $5m last year.
We will examine the first two of these listed winemakers as they hold specific interests in SA.
Australian Vintage Limited (ASX Code: AVG) owns many boutique vineyards and packaging and distribution facilities and makes wine for domestic and international wine consumers, exportin...