10/10/2012 - 09:43

Bigger Fogarty targets Asia wine growth

10/10/2012 - 09:43

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Bigger Fogarty targets Asia wine growth
SCALE: Fogarty says the Margaret River facility will help it supply bigger volume markets in Asia. Photo: Fogarty Wine Group

FOGARTY Wine Group has embarked on a significant expansion into Asia’s wine markets with its acquisition of the largest wine-processing facility in Margaret River.

Originally part of the Evans & Tate group, the facility was bought for an undisclosed sum from South Australian winemaker and brewer Boar’s Rock through a 80-20 split between family-owned Fogarty and McWilliams Wine Group.

It has the capacity to process 10,000 tonnes of grapes and store 12 million litres of wine.

Fogarty’s Western Australian wine-making facilities have quadrupled as a result of the purchase, which it bought as part of a major expansion drive into China, Singapore, Japan and Korea.

Fogarty owns four boutique wineries – in the Perth Hills, Margaret River and Pemberton and in South Australia’s Hunter Valley.

The push into Asian markets is expected to lift the group’s production seven-fold over the next five years.

In WA Business News’ Book of Lists published in May, Fogarty’s annual wine production was listed at 1.75 million litres.

Chairman Peter Fogarty, who owns the company with his wife Lee, told WA Business News that figure would rise to about 4 million litres by the end of this financial year.

“Across the group, we’re looking to increase production from 2,000 to 15,000 tonnes of grapes, roughly seven times our current production,” Mr Fogarty said. “Realistically, that’ll take us five years but this year alone we’ll increase our production three-fold.” 

Mr Fogarty said the group planned to increase sales into multiple Asian markets and needed greater capacity to achieve that.

“The Asian markets always talk in large quantities, hundreds of thousands or millions of litres and, so to have that capacity, you’ve got to have large facilities,” he said.

Production of red wine relies on longer storage periods of at least one to two years before it can be sold.

“China’s an important market and we’re focused on that but we’re also actively selling into Singapore, Japan and Korea,”  Mr Fogarty said.

“We’ve been active in those markets for a while and we’ve been developing our networks there but the problem we had in the past was we didn’t have the capacity to handle the sort of levels they were looking for, now we have that capacity.”

Included in the purchase was a separate bottling plant that operates as a stand-alone facility.

National wine-packaging company Portavin has been using the facility and will stay on with the change in ownership.

“Portavin have stayed on board and entered into a new lease for 10 years to continue its bottling there,” Mr Fogarty said.

“At Fogarty we’ve now got the whole lot; vineyards, a vineyard management business, wine-making capacity and bottling capacity.”

The processing facility has also created two new revenue streams for Fogarty. First is the rent from Portavin at the bottling plant and, second, it has given the group facilities to offer rental storage space to other wineries.

Boar’s Rock listed the Margaret River plant, as well as two other South Australian facilities, for sale in July. It completed the sale of the Margaret River plant late last week. 

Mr Fogarty rose to prominence in the early 2000s as chief executive of sharemarket technology darling ERG Group, an automated ticketing company. The company was delisted in 2009 after contractual disputes and a failure to complete million-dollar transport ticketing contracts. It is now owned by a private investor.

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