Troubled McWilliam's Wines puts all assets up for sale

Colliers to sell off McWilliam's wineries, vineyards and brands

News
Aa

Administrator, KPMG, expects strong interest from a diverse group of potential buyers after putting the entire McWilliam's business up for sale

Aa

The 142-year-old McWilliam's Wines Group's winery portfolio is officially on the market with expressions of interest from potential buyers invited until the end of March.

McWilliam's Wines was placed in voluntary administration last month with chairman, Jim Brayne, saying a number of factors had contributed to a decline in business performance, including capital constraints and changing market dynamics.

Administrator, the financial services giant, KPMG, expected a "high level of interest from a diverse group" of potential buyers interested in either buying or recapitalising the wineries, vineyards and award-winning domestic brands.

The sixth generation family company is one of Australia's oldest winemaking names, with its Hanwood winery being one of the nation's largest.

The Hanwood vineyard, outside Griffith in the NSW Murrumbidgee Irrigation Area, was even planted prior to the arrival of irrigation water to the region.

The family's first grape vines had been earlier established on the Victorian border at Corowa in 1877, extending to the Griffith district in 1913 and eventually expanding to operations in the Hunter Valley, and South Australia's Coonawarra.

Big, diverse business

McWilliam's Wines, considered one of Australia's top 10 winemakers by revenue, also sources grapes from the cool climate Canberra area, and Hilltops (Young) and Tumbarumba regions in NSW.

Its Hanwood winery processes up to 42,000 tonnes of grapes annually, about 2000t of which are crushed and bottled for the premium wine market.

The McWilliam family has also owned the renown Mount Pleasant estate in the Hunter since 1941, where it has a premium winery operation with capacity to process about 800t a year.

Both the Hanwood and Mount Pleasant sites include onsite cellar door retail facilities.

McWilliam's Wines Group's brand range spans the Mt Pleasant, McWilliam's and McW names, as well as having import distribution rights for Taittinger champagne and Mateus Henkell.

RELATED READING

In a normal year the company has gross sales of about $97 million and produces about 1.3m (nine litre) cases of wine, of which about 100,000 are exported.

Hunter harvest scrapped

This year, however, drought and intense smoke from the summer's bushfires forced Mount Pleasant to abandon its crush completely rather than risk bottling a premium vintage corrupted by smoke taint.

McWilliams will produce about 30,000 fewer cases because of the decision to scrap its 2020 Hunter vintage.

Other Hunter Valley wineries made the same call to avoid damaging their premium vintage reputation.

Existing wine industry groups will see this as an outstanding opportunity to add an iconic name to their portfolios - Tim Altschwager, Colliers International

KPMG administrators, Gayle Dickerson, Tim Mableson and Ryan Eagle this week confirmed property agency Colliers International's Tim Altschwager and Nick Dean would sell the business and assets as a going concern or separately.

Expressions of interest were sought before 4pm on March 31.

Past sales, leaseback

Five years ago Colliers negotiated the sale and leaseback of McWilliam's Hanwood vineyard and two in SA, Kirkgate and The Station, to Chinese group CK Life Sciences for $15.7m.

McWilliam's had earlier also sold its Middle Creek vineyard in the Hunter.

According to annual report documents filed with the Australian Securities and Investment Commission, McWilliams posted a $5.4m loss in 2017-18 and required urgent funding to continue operations.

Media reports noted the company also intended to raise $9.6m by selling most of its majority interest in its trading partner Margaret River Wine Production and receive about $6.2m for secured convertible notes in McWilliams" to help repay debt and for working capital.

New profit initiatives were also put in place to lift earnings by 2020, but may not have been effective enough.

Growth opportunity

Mr Altschwager said this year's subsequent sell off move provided a unique opportunity for investors to acquire an iconic, historic, privately-owned Australian family business, plus a large amount of stock and significant property holdings.

McWilliam's iconic status offered great potential for growth, particularly in overseas markets.

"We anticipate wide-ranging interest from major wine industry participants, private equity investors, high net worth individuals and buyers looking for restructure opportunities," he said.

"In particular, existing wine industry groups will see this as an outstanding opportunity to add an iconic name to their portfolios."

McWilliam's Wines' Hanwood winery in southern NSW.

McWilliam's Wines' Hanwood winery in southern NSW.

While McWilliam's did not have an extensive international distribution network, there was a substantial opportunity for buyers with export networks "to really ramp the business up".

He noted exports were helping driving Australian wine sales volumes to all-time highs and the company was well positioned to capture this growth potential.

Mr Mableson said despite the Hunter harvest setback and the voluntary administration move, the 2020 vintage was well under way, with customers, growers, suppliers and employees continuing to support the business.

"There has been no direct impact to the McWilliam's Wine Group's Riverina region vineyards as a consequence of the recent Australian bushfires," he said.

"There is sufficient back vintage bulk wine and finished goods for the Mt Pleasant brands so commitments to markets are not impacted."

  • Start the day with all the big news in agriculture! Click here to sign up to receive our daily Farmonline.
Aa

From the front page

Sponsored by