Unlock the Editor’s Digest totally free
Roula Khalaf, Editor of the FT, selects her favorite tales on this weekly e-newsletter.
A Bain-led consortium has taken over Australia’s second-largest wine producer Accolade Wines after it struggled to adapt to Chinese tariffs and a shopper shift away from lower-priced manufacturers.
The firm behind manufacturers corresponding to Hardys Wines and Banrock Station was purchased by Carlyle in 2018 for A$1bn (US$660mn) at a time when personal fairness bidders had been focusing on Australian wine corporations.
But Accolade has been hit by the Covid-19 pandemic’s damaging affect on the hospitality sector, the introduction of punitive Chinese tariffs on Australian wine in 2020 and a change by many customers to dearer wines.
“Accolade Wines has a long, proud Australian history as a world class wine producer and we hope it will remain so for many decades to come. We hope this restructure will build a more secure long-term future of the business,” mentioned a spokesperson for the consortium.
“Like all Australian winemakers, we have been hit by a number of challenging macroeconomic and industry headwinds in recent years,” mentioned Robert Foye, Accolade Wines chief government. “Our ability to respond to these challenges and grow has been hampered by an unsustainable balance sheet.”
Accolade, which has a near-A$600mn mortgage due in 2025 in line with the corporate, has been struggling to service its money owed. The new homeowners, led by Bain’s particular conditions unit, have been shopping for up Accolade’s debt at a heavy low cost and hope to finish the corporate’s recapitalisation by the center of the yr. The firm has commenced talks with grape suppliers in South Australia to renegotiate provide contracts.
Called Australian Wine Holdco, the consortium additionally contains asset managers Intermediate Capital Group, Capital Four, Sona Asset Management and Samuel Terry Asset Management.
Accolade has already been promoting smaller manufacturers, together with its Tasmanian winery Bay of Fires, to decrease its debt. Analysts mentioned the restructured firm was prone to be a consolidation goal for a big commerce purchaser or a non-public fairness firm.
Australian winemakers are getting ready for a reopening of the Chinese market, as soon as the sector’s development driver, after a overview of the 2020 tariffs was kicked off late final yr.
The overview adopted a state go to by Australia’s Prime Minister Anthony Albanese to China in November and a resumption of buying and selling for different merchandise that had been halted after the then-Australian chief Scott Morrison known as for an inquiry into the origins of Covid-19.
Australian wine corporations together with Treasury Wine Estates and Accolade have turned to different markets in south-east Asia and North America to offset the lack of Chinese gross sales. Accolade struck a cope with basketball participant James Harden to launch a signature wine assortment to drive US gross sales final yr.