One step at a time
Accolade Wines’ path to public listing or an all-out sale is a “one step at a time” approach. The latest news appearing in the press says a listing will take place early next year, but whether that will be on the London or Australian exchange is not yet decided.
Accolade’s owners, CHAMP Private Equity (80 per cent) and Constellation Brands (20 per cent), are said to be looking at a $1 billion float. This would be a good return for CHAMP, which acquired its 80 per cent from Constellation for about $290 million in 2010.
In September 2015 CHAMP/Accolade sold its stake in UK wholesaler Matthew Clark for $200 million. Add in the return it will get from the float and CHAMP has done extremely well.
Constellation paid $1.9 billion for BRL Hardy in 2003, so its 20 per cent holding will return some cash but not the full outlay. Accolade is expected to show earnings of between $75m to $100 million for the 2015-16 financial year.
Accolade’s current strong markets are domestic sales, estimated to be about 30 per cent, and the UK/Europe, at 60 per cent. This leaves a mere 10 per cent for the rest of the world. This can be looked at in different ways. The negative view would note a lack of balance; the positive would see opportunity.
China, the rest of Asia and the US lead the opportunity sector. What’s more, in China, Accolade’s large portfolio of premium wines could come into play.
The Australian Organic Market Report 2014 (latest available) shows the top five organic exported products for 2014 were, in order:
- Processed foods
- Wine and beverages
- Fruit and vegetables
The value of organic wine and beverage production in 2014 was put at $117.41 million, up 14 per cent on 2012. Of this, exports accounted for $25.83 million, with leading markets being China, Canada, Singapore and Europe. Organic meat exports totalled $109.69 million.
Unnamed producers and retailers are quoted (the producer is probably from South Australia, as that is where the majority of organic wine comes from):
“I think the future for organic wine in Australia is very, very strong and very, very bright. We’re seeing a fantastic growth in our own industry. This is evident from the number of new entrants into the marketplace and the number of wineries that are being converted to organic … But we’re looking at new product development, new varieties to bring into the organic sector as well, as we see it growing and expanding.”
“We’re also seeing a lot of liquor stores and restaurants that actually have separate organic sections on their wine listed in their shops, which five years ago they didn’t have. So they’re obviously seeing a lot of growth and a lot of potential in that sector as well.”
The farm gate value for organic grapevines in 2014 was $54.5 million, up from $25.13 million in 2012. The yearly growth since 2012 was 29 per cent.
Organic wine grape production increased 120 per cent between 2011 and 2014, with a total sale value in 2014 of $12.07 million.
Farms with organic certification across the whole farm (greater than 95 per cent of land) produced organic wine grapes to the value of $2.06 million. South Australia was responsible for $1.94 million of this, and 85 per cent of the overall estimated value of production nationally.
Yalumba and Angove are mentioned in the report as large organic growers/producers. Angove gets the bigger profile, including:
“Angove entered the organic market in 2005 and today produces five wines certified by Australian Certified Organic, with another three to debut in the market by the end of 2014. Angove has 69 hectares of organic vineyard spread across the Riverland and McLaren Vale regions, and an additional 55 hectares in conversion to organic.
“The family has strong relationships with a number of organic growers. Angove’s organic wine range is sold in 1000 stockists across Australia.”
Organic is a growing market and Australia is well positioned to take advantage both domestically and internationally.
Moments before being published the news came through that Pyrenees based Mount Avoca has received full organic certification for its winery. The vineyards were certificated in 2013 now the winery has it’s a 100 per cent organic organisation.