Australian Vintage has announced that it is initiating a strategic review that may lead to potential third-party interest from domestic and international parties, in part or in whole, for the company.

The wine group has appointed E&P Corporate Advisory to assist with the review, which will include consideration of a full
range of available strategic, business and financial alternatives to maximise value.

Shares in the company jumped 10% following the announcement.

Australian Vintage confirmed to the ASX that while it continues to engage with a number of third parties regarding broader industry consolidation, it has not received any change of control proposals.

The Australian Financial Review noted: “A logical name for possible consolidation is The Carlyle Group’s Accolade Wines, which is going through its own troubles, though any deal with them would require someone to stump up a fair amount of cash. The private-equity-backed group is planning to sell one of its most prestigious brands, House of Arras in Tasmania, as it confronts high debt levels.”

The company announced in a trading update on 15 June 2023 that it was operating within a challenging business environment given continued inflationary impacts, consumption trends in the value segment facing pressure, market dynamics impacting the ability to take further price and excess wine capacity further impacting industry
economics.

Despite these challenges, Australian Vintage said it was encouraged by its ability to grow its market share across all of
its key geographies, and in its leadership within the strongly growing zero and low-alcohol wine markets.

Australian Vintage is currently a leader in the zero-to-low alcohol category and has also won a slew of awards, including Overall Judges’ Wine of Show at the 2023 Mid-Low-No Alcohol Wine Awards for its Not Guilty Rosé.

Challenging times for the drinks industry

Treasury Wine Estates put more than 1000ha of South Australian vineyard properties on the market last month as part of the restructuring of its business, following CEO Tim Ford confirming to The Australian Financial Review in May that a review of the business was under way.

The Australian noted: “Just in the past week or so online spirits marketplace Gintonica – which raised almost $250,000 last June in a crowd-funding campaign – was placed in administration; the managing director of Mighty Craft – whose shares are now worth about half the $47m company paid for an acquisition in mid-2021 – quit the company in the midst of a “strategic review”, and; Tasmanian distiller Lark Whisky said sales in the second half were coming in weak, triggering a sell off in the stock.

“In May, ASX-listed wholesale beverage marketplace Kaddy was placed in administration, with its shares falling from a 12-month high of 60c to just 2.7c when they were halted from trade in February.”