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Australia’s largest wine producer plans to expand its business significantly in China by using shipments from other markets to crush the tariffs Beijing has imposed on Pacific national exports.
The owner of the well-known brands Accolade Wines, Hardys and Echo Falls, said he would send wine from Chile and other places to China, which would allow him to avoid it. tariffs diplomatic tensions were set to rise in November to 218 percent.
As a result, exports of wine to Australian China fell by 96 per cent a year, to just $ 12 million between December and March. data Wine Australia, a governing body.
The plan was part of Accolade’s efforts buy The private equity group Carlyle paid $ 1 billion ($ 778 million) in 2018 to expand beyond its core markets in Australia and the UK and sell more premium wines.
The company is also considering an initial public offering, with Hong Kong as a potential location.
“We believe we can achieve a high stake in China,” said Accolade CEO Robert Foye, who acknowledged that the company has been slow to enter China for a long decade. the wine boom. “I just think so [Accolade] that global management team that knew how to run the company. ”
According to Foyer, the Chinese wine market may grow for another 15 years due to low per capita consumption and middle-class expansion.
Accolade, which generated $ 1.2 billion in revenue last year, aims to boost sales in Asia, the U.S. and other markets, Foy told the Financial Times.
Matthew Reeves, an analyst at the IbisWorld research group, said tariffs have hit Australian smaller producers hard, but the country’s largest winemakers have been able to access products for the Chinese market. elsewhere.
“Accolade has the backing of private capital, so it’s a viable strategy to import it from China from elsewhere,” he said.
Foye, who built a successful business in China as chief operating officer of rival Treasury Wine Estates, was unspecified before being removed from office for a breach of internal policies, Accolad said, adding to the list of purchase targets. The company has brands in Chile, the US and South Africa and wants to add more premium wines suitable for Chinese palatessuch as reds with a sweet and fruity flavor.
Accolad has acquired two excellent wineries in Australia, Rolf Binder Wines and Katnook Estate, in the last year.
However, Foye agreed that Chinese tariffs would slow expansion, as most production was in Australia.
Accolade aims to boost sales to foreign markets in the EU and the UK by 60% of the group’s total in three years, around 40 per cent by 2021.
The winemaker made a loss of $ 11.6 million as of June 2020, the accounts showed.
According to Moody’s Investors Service, the leverage of the business earned nine times in 2020 before interest, taxes, amortization and amortization. The rating agency downgraded Accolade’s debt base from B3 to B2, deepening it to a speculative level just over a year ago, citing projected restructuring costs, production problems and higher than the coronavirus pandemic.
Foy said the group predicted a 25 percent increase in earnings by June 25 and was looking at the stock market.
“I want to do an IPO. And that’s what we’re going to do at Accolade Wines. So in the next two or three years we will do that on the Australian stock market or I would really like to do that on the Hong Kong stock market. “
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