Australian Vintage has struck a deal to sell a clutch of assets which it uses for its Nepenthe wine brand.
In a filing on the ASX, the company said it had “signed binding agreements” to divest its Adelaide Hills cellar door and vineyard to Woodthall and Adelaide Wine Co., also known as Tomich Wines.
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Australian Vintage has agreed to offload the assets for A$5m ($3.6m).
The business still has “full ownership” of the Nepenthe brand, it said.
In the filing, the group said the move “is consistent with the company moving towards an asset-light, brand-focused business model that aligned with [its] long-term strategic goals, removal of loss-making business units and a continued focus on debt reduction and steadfast commitment to enhancing shareholder value”.
The deal is due to be settled in November, with net funds from the transaction being used to lower debt.
Australian Vintage’s CEO Tom Dusseldorp pointed to dwindling wine tourism as a reason for the sale.
“As wine tourism continues to decline, loss-making cellar doors do not add the value they once did,” he said.
“The sale of this asset can return cash to the business so the company can pay down debt and generate long-term shareholder value whilst maintaining high-quality standards.”
Australian Vintage has set up a grape supply contract with Tomich Wines for next year’s vintage, “to ensure quality supply as the brand transitions to regional sourcing”.
“I want to thank our hard-working team in the Hills that this sale has impacted. It is never an easy decision to close a business but it was the right time for the next chapter of the Nepenthe brand,” Dusseldorp added.
Just Drinks has asked for further details on where Nepenthe is being produced, and whether any jobs have been impacted by the move.
In its filing, the McGuigan producer said Tomich Wines is “a respected multi-generational winemaking family with a rich history of viticulture in the region”.
Tomich produces a range of wines under its namesake label, including sparkling, Shiraz and Pinot Gris. Its drinks are sold in its home market as well as overseas, including the UK and Canada.
In its full-year results, shared last month, Australian Vintage’s management said it was now a “stronger, more agile business”, after a year of work to boost cash, bolster the group’s balance sheet and cut costs.
It saw its annual losses grow in the year ended 30 June amid an inventory impairment charge, restructuring costs and a strengthening Australian dollar.
The Poco Vino brand owner saw its revenue rise 0.4% in the year as growth in the second half offset lower sales in the first six-month period.
Last week, fellow Australian wine giant Treasury Wine Estates completed the sale of its Tollana Wines brand to local business Sword Distribution. The brand had not been produced since the 2017 vintage and TWE held no inventory at the time of sale.
