Australian Vintage Struggles to Find Investor

The publicly traded wine company is looking for a buyer. The value of Australian Vintage is estimated at US$67m.

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Challenges have affected the company (Photo: Nattawat/stock.adobe)
Challenges have affected the company (Photo: Nattawat/stock.adobe)

Inflation, a decline in sales in China, and a poor harvest in Australia are posing serious problems for the country's wine industry. A producer like Australian Vintage Limited (AVL), which focuses on the lower-price sector, is particularly affected. Rising transportation costs and a decline in demand, particularly for affordable wines, have led to AVL finding itself in difficult waters.

The company has therefore engaged the consulting firm E&P Corporate Advisory, as stated in a circular to shareholders dated July 3. It also states that all options will be explored to increase the value of the ailing stock. The whole or partial acquisition by another company is explicitly included. The circular states that all conversations that had been held in this regard up to July 3 did not involve a change in management at AVL.

Multiple issues

In June, AVL had already stopped paying dividends to shareholders in order to counter the poor numbers, in view of the extremely rising costs that had burdened the company with A$26m (about US$17.5m) recent years. At the time, the company said it expected a slight decline in sales. In 2022, the company generated A$260m (about US$175m) and had an EBITDAS profit of A$45.7m (about US$30.7m). A dividend will only be paid again when the debt-to-equity ratio has improved.

Within one year, the share price of Australian Vintage has fallen by around 40% by July 2023. The Australian Financial Review brings Accolade Wines into play as a possible buyer, but it is also struggling with financial problems.

AVL owns the brands "McGuigan Wines", "Tempus Two" and "Nepenthe". 44% of AVL's sales are made in the export markets of the United Kingdom and Ireland, making the British Isles the most important market. The company is considered one of the leaders in the sector of reduced-alcohol and alcohol-free wines. RED

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