Indian Giant Buys Avl's Big Sa Winery

Sydney Morning Herald

Thursday March 20, 2008

Scott Rochfort

THE Indian vigneron Champagne Indage is set to make the largest foreign investment in Australia's wine industry since the grape glut started to clear a year ago, after announcing plans to buy Australian Vintage Limited's Loxton winery for $60 million.

Australian Vintage, formerly known as McGuigan Simeon, announced yesterday that it had signed a deal to offload its second-largest winery - and Australia's fifth-largest - to Indage within six months, pending due diligence.

"We're pleased we're able to find a buyer and sell at a price we're comfortable with," said AVL's chief executive, Dane Hudson. Mr Hudson said $40 million from the sale of the 90,000-litre facility in South Australia's Riverland would go to reducing his company's debts of about $150 million.

The rest will go to upgrading AVL's remaining 150 million-litre winery in the Hunter Valley.

Shares in AVL closed steady at $1.32, despite Mr Hudson stressing the sale would help his company ditch underused assets.

The deal follows AVL's sale of its Griffith winery to the Yellowtail winemaker Cassella Wines for $10 million in November.

Mr Hudson played down concerns his company's debt levels were too high, even after the asset sales. "We've had no issue servicing it at all," he said.

Indage said its purchase of Loxton was part of its plans of "going global".

The group, which claims to account for 70 per cent of India's wine sales, made its first step outside India when it bought Tandou Wines in the Riverland district last September. (It has renamed it Thachi.)

Indage's managing director, R.S. Chougule, said in the annual report that the Thachi purchase was the "first small step towards a giant stride ahead" in a five-year plan to have production facilities in 10 countries.

Indage has 2630 hectares of vineyards in India and is valued at $195 million on the Mumbai Stock Exchange. The chief financial officer, Rajesh Chalke, told the Herald Indage wanted to establish production facilities in countries such as Australia, Argentina, France, Italy and South Africa, where domestic consumption was strong.

While the bulk of the wine from the Loxton winery would be sold locally, Mr Chalke said some would be shipped to India and other countries and bottled there.

While small, India's wine market was one of the fastest growing in the world, with annual growth of 60 per cent over the past three years, he said.

Ironically, the high import duties on wine in India have traditionally helped local producers such as Indage. Imports, according to Wine Australia, account for less than 25 per cent of India's wine consumption.

© 2008 Sydney Morning Herald

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