AUS: Cheviot Bridge confident in Australian recovery
The chairman of Australian wine company Cheviot Bridge has said he believes the Australian wine industry could at last be coming to the end of its over-supply crisis, and that his own company was "ideally placed" to capitalise on the upturn.
At the company's AGM today (28 November), chairman Paul Batchelor said there was a likelihood that supply and demand of grapes would reach equilibrium faster than expected. However, he added that the wine market had remained very challenging throughout 2005-2006.
"Many participants reported significant losses while some companies restructured their balance sheets and business models," Batchelor said. "Market sentiment has been negative in respect of the industry for several years, largely due to the wine glut. That now looks to be ending with the AWBC's (Australian Wine & Brandy Corporation) report which halved its estimate of excess supply on an annual basis to 500m litres."
Batchelor added that weather conditions may also have helped to alleviate over-capacity. Severe frosts in south eastern Australia and the drought, Batchelor said, could see production fall by about 25% in 2007. "Year '08 will also see reduced yields," Batchelor said.
Batchelor said Cheviot was ideally placed to capitalise on the anticipated upturn in the Australian wine market thanks to its diversified low capital intensity business model and a wine range with strengths in the domestic market.
"Cheviot Bridge's strategy is to grow its three core businesses profitably by leveraging its assets, its unique structure, its knowledge and by finding and taking opportunities and identifying and entering new growth markets," Batchelor said.
The company posted sales of A$20.2m (US$15.7m) for the year to the end of June, up by more than 100% from the previous year, while net profit reached A$362,000.
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