Consumer DECODED
Previous edition: 09 May 2024
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Australian Vintage prematurely ends lease for Balranald vineyard
Australian Vintage has decided to end the lease for its Balranald Vineyard seven years before it was due to expire.
The McGuigan winemaker said the decision will give it “flexibility in its sourcing strategy in a changing consumer environment”, it wrote in an Australian Stock Exchange filing today (9 May).
The Balranald Vineyard, which yields between 11,000 and 13,000 tonnes of predominantly red grapes in New South Wales, is owned by Belvino Regional Management Services, a company backed by Hong Kong-listed group CK Life Sciences.
Australian Vintage said: “The lease term was due to expire after the 2031 vintage however the parties have agreed to end the lease early. It is a testament of our strong partnership with Belvino that we were able to work through constructive options with the property, benefiting both parties.”
The lease will now expire on 26 June 2024 and the vintner estimates that the cancellation will bring in “net cash flow benefit totals [of] A$12.6m ($8.3m) over the remaining lease term”.
It added: “AVG and Belvino have committed to redeveloping other vineyards leased by AVG, including the Qualco and Jubilee Vineyards, maximising the combined return from these important assets.”
Last week, Australian Vintage ended the contract of CEO Craig Garvin “for engaging in conduct that, in its view, displayed a lack of judgement and was inconsistent with the values of the company and the high standards expected of its chief executive officer”.
The contract termination has since cast doubt on the talks Australian Vintage is holding over a potential merger with domestic peer Accolade Wines.
In February, the Adelaide-based wine and spirits company said it was in “exploratory discussions” with Accolade, although it underlined there was “no certainty that any transaction will eventuate”.
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