Viña Concha y Toro & Foley Family NZ

Viva y Toro

Viña Concha y Toro listed on the Santiago Stock Exchange in 1933 and the New York Stock Exchange in 1994. Its financial year follows the calendar year, hence June 30 is the half-year. Highlights for the second quarter and half:

Quarter sales: Ch$173,292,158 (thousand Chilean pesos) ($337.13 million), up 9.9 per cent. For the half: $594.22 million, up 11 per cent.

Quarter net profit: Ch$13,358,401 (thousand Chilean pesos) ($25.99 million), up 31.5 per cent. For the half: $40.47 million, up 29 per cent.

The company is doing well, especially in export markets. The first half results showed:

Asia: Total volume was up 25.2 per cent. Contributing to this figure was China (up 114 per cent), Japan (up 7 per cent) and Australia (up 184 per cent). The brands driving the increases were Casillero del Diablo (about $14 in Dan’s) up 35 per cent, Frontera ($9.40 in Dan’s) up 32 per cent, Sunrise (not aware if this is available in Australia) up 44 per cent, and new launches in China.

Canada was also a good market, with volume up 13.7 per cent. The leading brands there were Casillero del Diablo, Cono Sur Bicicleta, Cono Sur Orgánico (a Chilean organic brand) and Bonterra (an organic brand from Mendocino County).

In Europe volumes increased 7.1 per cent, with sales of Casillero del Diablo up 19 per cent, Frontera up 17 per cent, Trivento Reserve up 61 per cent and Bonterra up 21 per cent.

South and Central America, along with the Caribbean, recorded small increases, and Africa was flat. The disappointing region for sales was the US, down 7.5 per cent.

Overall, Viña Concha y Toro sales were down in the US, but its local subsidiary, Fetzer, performed well, recording a 9 per cent increase. According to Impact Databank, Viña Concha y Toro is the world’s ninth-largest wine marketer, at 34 million cases.

Viña Concha y Toro is also one of the largest vineyard holders in the world, having 9341 hectares in Chile, 1142 hectares in Argentina and 469 hectares in the US.

Kiwis state their case

As reported last week, New Zealand wines are starring in the US market. This was reinforced in the July-August issue of Shanken Market Watch, which focuses on New Zealand wines.

The report, written by Angel Antin, is an eye-opener, saying 90 per cent of imports are sauvignon blanc. It lists the top 10 brands, which account for 84 per cent of US sales. All are showing impressive increases (some information missing):

Brand Company Case sales Increase RSP US$ % of US sales
Kim Crawford Constellation Brands 955,000 17.2 per cent $17-35 23%
Oyster Bay Delegat 629,000 14.6 per cent $15-19 15%
Nobilo Constellation Brands 560,000 12 per cent $13-22 13%
Starborough E & J Gallo 420,000 13.5 per cent $15 10%
Matua Treasury Wine Estates 360,000 18.3 per cent $10-15 8%
Brancott Pernod Ricard 221,000 10.3 per cent $15-32 5%
Monkey Bay Constellation Brands N/A N/A $8-10 5%
Whitehaven E & J Gallo 120,000 20 per cent $20 N/A
N/A N/A N/A N/A N/A
Giesen Family brand 54,000 66 per cent N/A

The average shelf price is US$11.50 ($15.22), which is high. The majority of Australian wine in the US retails for less than US$8. New Zealand sauvignon blanc is now established in the US. The question being: will US consumers take on NZ pinot noir?

The bigger question: can Australian wine win back American consumers? We believe it can but there is a lot of work involved.

Foley venture no folly

Foley Family Wines has proved its investments in New Zealand are not a folly.

Listed on the New Zealand Alternative Exchange (NZAX), the Foley family wine company is headed by Bill Foley and has in its portfolio Vavasour, Goldwater, Dashwood, Grove Mill, Clifford Bay, Martinbough Vineyard, Te Kairanga and Lighthouse Gin.

The New Zealand company is 66.54 per cent owned by Foley Family Holdings New Zealand Ltd, which in turn is owned 80.47 per cent by Foley Family Wines Holdings in the US.

  • Sales for the year to June 30 were NZ$33 million ($31.6 million), up 4.7 per cent
  • Net profit after tax was NZ$6.5 million, an increase of 418 per cent

The table below shows domestic and major export sales. As with other companies, domestic sales declined, Australia was static and the US and UK showed outstanding increases.

Foley case sales 2016

The average price per case fell 2.5 per cent to NZ$78 in 2016 from NZ$80 in 2015.

The 2016 vintage produced 6954 tonnes of grapes, up 31 per cent on the 2015 harvest of 5300 tonnes (the reason for the decrease in domestic sales).

The result did not immediately move the market. The share price remained unchanged at NZ$1.65, but has risen by 19.4 per cent in the past year.

Foley share price chart

EU asking

The European Commission (EU) is seeking the views of all interested parties on how the current rules regarding the structures of excise duties on alcohol and alcoholic products work in the modern EU.

As the UK is still in the EU, this is a chance for Australian wine businesses that have UK-registered offices to have a say.

The EU is aiming to assess factors including the added value of EU intervention in this domain and how effective the existing framework has been so far.

The Directive sets out the fundamental characteristics, such as:

  • The methods for establishing and charging excise duty
  • Drinks classification
  • Reduced rates for SMEs producing beer and spirits
  • Exemptions, such as for alcohol denatured not for human consumption

The EU is targeting stakeholders directly impacted by Directive 92/83/EC. The targeted consultation contains detailed questions customised for the following types of stakeholders:

  • Producers of beer
  • Producers of wine / winegrowers
  • Producers of fermented beverages other than wine or beer
  • Producers of intermediate products
  • Producers of spirits
  • Producers, importers, distributors or users of denatured alcohol
  • Organisations representing the interests of the abovementioned stakeholders

An example PDF of the questions can be found here. Go for it.

 

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