Heady growth ahead for big WA wineries

WHILE wine makers in WA have reported an increasingly competitive domestic domain, many of the biggest operators are finding interstate growth through acquisition and strong success in a diverse range of offshore markets.

Despite talk of a downturn in the market, most wineries contacted by WA Business News indicated they had increased their crush projections for the next few years.

Already the State’s second biggest wine maker, Evans & Tate chief Franklin Tate revised his projected WA crush from remaining static at its current level of 7,500 tonnes to jumping yet again to 8,000 tonnes next vintage.

However, the true scale of Evans & Tate can no longer be measured by its WA operations, with the acquisition of Cranswick adding about 40,000 tonnes to the production capacity of the group that also owns Oakridge in the eastern states and has started supplying the own label products of Woolworths.

Mr Tate said there had been some softening of prices as volumes had risen but thought this tougher market would be better for well known brands such as his.

“Last time there was this sort of market, in the early 1990s, we grew our brand considerably,” he said.

Mr Tate said he believed there was room for further rationalisation in the industry, with somewhere between two and six bigger WA wineries likely to change hands in the medium term.

Exports continue to drive sales for Evans & Tate, as they do many WA wine makers these days.

Sandalford is another major producer (ranked 4th on the WA Business News List of Wineries) which has found big growth overseas.

Chief operating officer Grant Brinklow said Sandalford had extended its offshore reach to 35 countries from just five countries about two years ago.

Mr Brinklow said the most recent new market for the group was the United Arab Emirates where the government focused on tourism as a new market to replace reliance on dwindling oil reserves.

He said Sandalford had two key contracts, one with highly regarded airline Emirates and the second with the Jumeirah hotel group, which had a growth strategy he likened to its national airline.

“They selected a couple of our wines as house products. That is a sig-nificant order,” Mr Brinklow said.

In addition, Sandal-ford’s 2000 cabernet will be served on business class flights to and from Australia.

“We have done some pioneering work with respect to that part of the world,” Mr Brinklow said.

He said the winery was focused on producing icon products that would be regarded as the best of their varietal category from WA.

To achieve this it was putting new emphasis on the company’s strategic vineyards, particularly its prize possession in Wilyabrup, Margaret River.

A new viticulturalist, Peter Traeger, has been signed up to join Sandalford from Hollicks in Victoria.

Willow Bridge Estate chief executive Gavin Dewar said his company was achieving good results in the export market, notably Hong Kong.

While the Ferguson Valley near Harvey is not noted as a significant wine district, Mr Dewar said his brands were overcoming that hurdle.

“I think the wines themselves are standing on their own,” he said.

Mr Dewar said the market was getting more competitive but wines would do well if their price point was carefully selected.

Howard Park proprietor Jeff Burch said there was significant price pressure in the domestic market, particularly at the top end of the market, but export sales were looking good after a gloomy start to the year.

Mr Burch said US exports had grown 50 per cent in the year to June 30, despite three terrible months following the September 11 terrorist attacks.

He said a move by his Californian distributor to employ a brand manager for Howard Park’s Madfish range was another boost on top of a big rating for the wines by US wine guru Robert Parker in his value for money review. Other strong markets were Europe, particularly Ireland.

“I am still bullish with a bit of caution on the Australian market,” Mr Burch said.

“One proviso is what happens if the dollar reaches US60 cents.”

Houghtons state manager Brad Starkie said his company had found several innovations to combat price pressure in the Australian market, which it is focused on.

A new range of regional wines and offering some one litre bottles at 750ml prices had helped the BRL Hardy subsidiary achieve double digit growth for the year ending June 30.

Mr Starkie said the consolidation in the liquor retailing industry had been partly to blame for price pressure.

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