AUSTRALIA: Wine Planet worries as Oz market goes flat

By Chris Brook-Carter | 16 November 2000

Australian on-line retailer Wine Planet yesterday admitted that it remained well sort of breaking even and would not be able to repeat last year's triple digit percentage growth in the Christmas quarter. The company blamed an overall down turn in on-line shopping and lower domestic wine demand.The company, CEO Mark Mezrani said Wine Planet was likely to increase its sales by 20-30% this quarter, while revenues would need to double to about $40m a year to break even.Richard Turner, the company's chairman, warned: "It would appear that there is a negative consumer sentiment developing which may have an impact on overall retail sales in this country and it is well known that domestic wine demand is down."However he remained bullish about the company's future. "The inherent scalability of the business should see, once break-even has been reached, very strong growth in profits for each marginal increase in revenue," he said.Wine Planet's stock has slumped 89% from its record high in February of A$2.50 and there looks like little hope of a short-term recovery. However, the company still has a healthy cash position due in part to Foster's Brewing Group taking what will eventually be a 25% stake and injecting $50m into the company.The company blamed the Sydney Olympics, a pre-GST buying surge and very little advertising for the drop in sales over the September quarter. Mezrani said the September drop followed sales in the June quarter of A$1.1m a record for the company.As well as establishing a UK business, wineplanet.co.uk in October, Wine Planet also has plans to develop new direct wine channels as the economy quietens. It has diversified into off-line sales of wine and food and operates two retail stores in Sydney.