Gusto

Xanadu is eager to turn its dreams into reality, and so announced a bold three-year vision to investors, as Julie-anne Sprague reports.

XANADU chose an investors’ presentation this week to announce a three-year vision signalling an intention to grow exports significantly, expand the production at the Margaret River Winery and launch new brands to the Australian market by the end of the year.

The company, which listed on the stock exchange last year, posted an after-tax profit of $2.15 million and expects to increase that to $3 million next year.

After the recent acquisition of South Australian producer Normans and Next Generation Wines, Xanadu chief executive officer Andrew Moore says the company is placed to consolidate and, this financial year, will begin to realise its goal of becoming a great mid-size wine company.

“This is the year that Xanadu puts all its acquisitions together and becomes a mid-size business,” he says.

“Export growth is the key to growing this business.”

Mr Moore sits on the Australian Wine Export Council and, while he says the Australian industry will continue to grow aggressively overseas, he was less enthusiastic about the local market.

“I expect the domestic market will be quite flat. I don’t think the smaller producers will disappear but they will not play as big a part in the retail side of things,” Mr Moore says.

He says Xanadu will launch Next Generation Wines to the Australian market before Christmas.

“We will be announcing the distributor in the next four weeks,” Mr Moore says.

The Next Generation Wines include the Vin Five brand.

Mr Moore expects exports from the Normans brands to grow from $5 million to $15 million in sales this year, up to about $26 million by 2005.

The Normans brand Chais Clarendon recently won a gold medal at the Perth Royal Show Wine Awards and is part of Xanadu’s premium-brand focus.

“When we acquired Normans we inherited 22 brands. We only wanted the premium ones and we cut brands very early on in the piece,” Mr Moore says.

He expects the Margaret River facility to increase production by 1,000 tonnes.

The winery has the capacity to produce 10,000 tonnes of grapes, although current production is 2,500 tonnes, and Mr Moore says that should grow to 3,000 tonnes over the next two vintages.

Mr Moore says the company will capitalise on its Margaret River location.

“The majors [wine companies] are not there at the moment. BRL Hardy are there with a 50 per cent share of Brooklyn, and Southcorp have Devil’s Lair,” he says.

“It’s a great opportunity to build yourself up to be a great WA brand.”

Mr Moore highlighted the US as an important market for the company, and says the company expects the Australian wine market to gain more of a foothold. He predicts growth of 125 per cent, from 8.7 million cases in 2001 to 21.2 million in 2005.

The UK market is particularly strong for Xanadu and Mr Moore expects strong growth for the Normans and Next Generation Wines brands.