04/06/2019 - 15:26

Fogarty lifts wine dominance

04/06/2019 - 15:26

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Western Australia’s largest wine producer has increased its dominance of the sector in a year when many producers were affected by extreme weather events.

Fogarty lifts wine dominance
The Swan Valley is Western Australia’s oldest wine growing region. Photo: Gabriel Oliveira

Western Australia’s largest wine producer has increased its dominance of the sector in a year when many producers were affected by extreme weather events.

Business News’ annual survey of wine producers shows Fogarty Wine Group enjoyed strong production growth in the 2019 vintage.

While many wineries do not want their production figures published, they have supplied data to Business News that allows us to update our annual BNiQ ranking.

The data shows Fogarty Wine Group, helped by several corporate deals, accounts for more than a quarter of WA’s total wine production.

Led by chairman Peter Fogarty, the group’s volumes put it well ahead of other major producers in WA, including the two big corporate players – private equity-backed Accolade Wines and ASX-listed Treasury Wine Estates.

As well as lifting production, Fogarty Wine Group welcomed a new investor in its subsidiary Margaret River Wine Production Pty Ltd, which trades as Margaret River Vintners and is the region’s largest wine processor.

Brisbane-based investment manager Laguna Bay invested $60 million in January into MRV. The investment was part of a recapitalisation of east coast wine producer McWilliams Wines, which formerly owned 30 per cent of MRV.

Law firm Corrs Chambers Westgarth, which advised Laguna Bay, said at the time that Fogarty Wine Group owned more than one-third of the Margaret River region’s wine production.

Fogarty’s wineries include Deep Woods Estate at Margaret River and Millbrook Winery in the Perth hills.

Through its 70 per cent stake in MRV, it also controls Evans & Tate, which for many years has been Margaret River’s number one selling wine by volume.

The BNiQ survey shows the big family-owned wineries in WA include Burch Family Wines, Calneggia Family Vineyards, and Paul Holmes a Court’s Vasse Felix.

Calneggia has reported its fifth straight year of increased production, with output of 2.2 million litres.

Vase Felix has been steady in recent years, with production of 1.35 million litres.

Those numbers do not reflect last year’s acquisition of Geoff Barrett’s Watershed Premium Wines.

The circa $20 million deal gave Vasse Felix immediate control of the 80-hectare Watershed vineyard on Bussell Highway and took its total vineyard area to about 330ha across four sites.

The acquisition was expected to increase production by up to 10 per cent.

The BNiQ survey highlighted the impact of the extreme frost event that occurred last November.

As well as decimating wheat production in parts of WA, it adversely affected grape growing conditions, particularly in areas near the south coast.

Treasury Wine Estates, Burch Family Wines, Ferngrove Vineyards and Latitude 34 Wine Co were among the wine producers to report lower production.

Production at Ferngrove, which grows most of its grapes in the Frankland River area, fell to 758,000 litres.

This was the third successive fall in production, which suggests there is more at play than a one-off weather event.

Latitude 34 chief executive Robert Olde said his group lost 80 per cent of its grapes from its Blackwood Valley vineyards to frost.

“We lost 35 hectares,” Mr Olde told Business News.

“It turned black in 35 hours.”

The big picture
Total wine production in WA was about 68 million litres in the year to March 2019, according to Wine Australia.

Within this total, WA wineries exported 9.6 million litres.

Those exports were valued at $65 million, an increase of 6 per cent.

The number one export market was China, with $19.8 million of shipments.

The Wine Australia data highlights that WA makes a tiny contribution to national exports.

WA accounts for about 1.1 per cent of Australia’s wine exports by volume, but with WA having a strong presence at the premium end of the market, it accounts for 2.3 per cent of wine exports by value.

The BNiQ survey reveals wide variations in the export focus of different producers.

Ferngrove Vineyards exports 60 per cent of its production while Cape Mentelle Vineyards exports 55 per cent. Both have international owners.

Fogarty Wine Group has a mix that is similar to many other producers, with sales spread between WA (45 per cent), interstate (40 per cent) and international (15 per cent).

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