NZ: Babich eyes targets as consolidation looms
Babich Wines, one of New Zealand's largest family-owned wine producers, has hinted that it will look to take part in any consolidation in the country's booming wine industry.
Martin Tutty, director of sales and marketing at Babich, told just-drinks that consolidation is set to happen among New Zealand's smaller wine producers as they compete for a bigger share of the country's buoyant wine exports.
"Consolidation will definitely happen," Tutty said yesterday (16 January) in London. "It's no secret that, in some circles, some banks are saying that some relatively new wineries have over-extended themselves financially."
In the 12 months to 30 June last year, New Zealand wine producers enjoyed an 18% leap in export revenues to NZ$512m (US$353m) with growing sales in the country's key markets of the UK and the US. New Zealand wines also command a higher average price compared to wine from the country's New World rivals in key markets like the UK.
However, Tutty said that not all wineries in New Zealand are reaping the benefits of the export boom.
"Where one winery does well, another is struggling to get all its ducks in a row," he said. "I know New Zealand wineries that can't crack the US, for instance, because of the unique, three-tier distribution system there."
He added: "We like to keep a weather eye on the situation. We're not going to stay at the same level we're at now and we want to expand in a considered way without over-extending ourselves. We'll keep looking for opportunities."
In the six months to 31 December, Tutty said Babich had seen sales leap 45% year-on-year, thanks to growing sales in the US - Babich's biggest export market - the UK and Canada.
"We've put in a long, hard slog over the last ten years, a lot of investment in building our export base and we are seeing good, positive results," Tutty said.
"One market that has become really significant, that has come from nowhere four years ago, is Canada. We've put in four years' hard slog to really develop that market. We've been lucky, but we create our own luck because of our strategy and the way we operate."
Babich, which celebrated its 90th anniversary last year, has bought a vineyard in New Zealand's wine heartland of Marlborough and is making a "multi-million dollar" investment into expanding its Auckland winery, Tutty said.
"The Babichs have never been shy to reinvest in the business," he added.
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