PERHAPS growing a wine business is a bit like consuming a good red – you have to take the time to savour the taste.
At least that appears to be the case for Evans & Tate CEO Franklin Tate who remains cautious about the next stage of growth for the Western Australian-based business despite the headline success of the takeover of Cranswick Premium Wines.
Mr Tate told WA Business News that the earlier than expected bedding down of the Cranswick merger, which he said had already added 17 per cent to earnings per share, had not whet his appetite for another big purchase soon.
“We are not in a burning hurry. There is plenty of growth in this business at the moment,” he said.
“I can’t see anything in Australia in the next year that is going to come along and blow me away.”
Mr Tate put an 18 month time frame on the next deal that would transform the business in the way the Cranswick transaction had done, though he left a small window open for an about face if the opportunity came along.
“There might be a surprise,” he said.
Examples of a surprise turn might be the sudden availability of a large private Australian wine-maker or possibly a US producer coming up for grabs.
“It would be ideal as a counter cyclical act to buy a winery in the US,” Mr Tate said.
“At US76 cents it would be a great but I don’t think it will happen.”
The Evans & Tate chief said there was plenty to do in improving production and distribution in the existing business, flagging some smaller acquisitions that might impact on these areas during the current calendar year.
The merger has catapulted Evans & Tate into the top league of Australia’s wine producers, putting it at eighth in pure volume terms with a forecast production of 52,100 tonnes nationally (Margaret River is set to account for 10,600 tonnes of that) and case sales jumping to 703,000 in the six months ending December 31 from 195,000 in the corresponding half.
Mr Tate said this placed Evans & Tate at third in terms of production volumes among the pure listed wine stocks.
Revenue for the period rose 180 per cent to $53.7 million from $19.2 million to produce a net profit of almost $2.1 million, an 80 per cent improvement on $1.2 million during the pervious December half.
One of the biggest concerns to Australian wine exporters has been the surging currency but Mr Tate played down the impact on his company, which derives 30 per cent of its revenue from offshore markets.
He said sales in foreign denominations were just 18 per cent of group revenue, with the bulk of that in UK pounds and Euros which had not depreciated substantially against the Australian dollar in recent times.
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