Want to invest in a vineyard?
According to media reports, there are more than AUD 450 million worth of wineries and land on the market. Such a fire sale would not have been imaginable ten years ago but there is a tidal wave of departures, from both small lifestyle dreams gone sour and big corporate investments now short of friendly bankers and cash.
Last year, Constellation Wines Australia, the local subsidiary of the world’ s number one wine company Constellation, announced it was putting 23 vineyards up for sale. At the time, the market was already oversupplied and there was little interest.
Constellation expected all sales to be completed by the end of last year but so far, there have only been some sales in Western Australia.
None of the South Australian assets have sold, even though they included two McLaren Vale, four Clare Valley and five Limestone Coast vineyards, and despite the fact that Constellation undertook to maintain fixed contracts to buy the grapes of many of those vineyards.
In May, another corporate wine company, Foster’ s, put 31 vineyards on the market.
Many of these vineyards are also in southeastern Australia, where it is fair to say there is an oversupply of vineyards for sale.
The region has also been badly affected by drought.
The Foster’ s properties were put into a flooded market at a time when the depredations caused by the drought had used up the last of most vineyards’ reserves and the economy and grape prices were in disarray.
In an effort to soothe worried investors, Foster’ s maintained it was not leaving the wine sector, but was leaving the property sector.
Like Constellation, Foster’ s will continue to issue grape contracts to many of the vineyards it is selling. The offering will cut Foster’ s vineyard holdings by 30 percent. The wine company is selling 4000 ha of vineyards.
In the U.S., Constellation’ s difficulties have caused their first victim. Jon Moramarco, Chief Executive of Constellation International, which included Constellation’ s subsidiaries outside the U.S., departed at the end of June. His post had only been created in January 2007.
His job is being eliminated due to a review of the international operations. Mr Moramarco had joined the company from the U.S. unit of Allied Domecq Wines in 1999.
