Australian Vintage, the third largest wine producer in Australia, is trying to revive its China market after its biggest shareholder from China suffered a AUD 7 million loss following the company’ resumed trading.
Prior to the punitive tariffs, the company counts about 10% of its total sale from the Chinese market.
Yuan Jiang (or Dixon Yuan), founder of China’s leading online wine retailer Yesmywine.com, invested in Australian Vintage in 2017 through Vintage China Funds and established Vintage China to represent and promote Australian Vintage’s wines in China.
The fund company managed by Yuan acquired a stake of 14% of Australian Vintage after a placement of AU$16.5 million at a price of AUD 0.46 per share in 2017. But the 45% dive in Australian Vintage’s share price after resuming trading meant its losses on paper have worsened to about AUD 7 million.
Yuan’s fund still distributes Tempus Two but its McGuigan brand in China is distributed by state-owned COFCO Wine & Wine, one of China’s Top 50 Wine Importers.
The acting chief executive told AFR that the comapny is trying to revive the China market after the removal of tariffs, but currently UK counts as its biggest export market.
Financial Troubles
After a failed merger with Accolade Wines, Australia’s second-largest wine company, Australian Vintage has a run-in of troubles to keep the business afloat.
Despite already raising AUD 15 million, this seems insufficient to reverse the company’s downturn in the financial market, with its stock price dropping below the lowest point since July 2010.
On June 13, Australian Vintage confirmed it had raised AUD 15 million through a placement and institutional share offering, issuing about 75 million new shares to existing and new investors.
However, five days after resuming trading, the stock price did not rebound, closing at AUD 0.19 per share, more than 44% below the price at the end of last month’s suspension, marking the lowest level since July 2010.
The company has debts of about US$ 65 million, and its chairman, Richard Davis, also announced he would resign after the completion of the AUD 20 million financing.
Since February this year, Australian Vintage has been negotiating a merger with Accolade Wines. The negotiations were reportedly going well, but on the evening of May 22, 2024, Australian Vintage Group received a letter from Accolade Wines clearly stating that Accolade Wines and its major creditor, Bain Capital Group, are currently unable to continue further negotiations.
Notably, in May, Australian Vintage CEO Craig Garvin was fired due to “behavioral issues,” raising concerns among fund managers that this could jeopardize the cooperation with Accolade Wines. However, its Chairman Richard Davis stated Garvin’s departure did not affect the situation, yet the negotiations were terminated later that month.
Worse still, according to Australian Vintage, by the end of next month, its debt could exceed expectations by more than 50%, soaring to an astonishing AUD 70 to 75 million, far above the company’s estimated “manageable range of AUD 43 to 50 million.”
Despite raising AUD 15 million, the existing funding gap may still lead investors to be pessimistic about the company’s prospects.
On Chinese social media, the company is still actively promoting Australian Vintage’s wines. How Australian Vintage will address the financial crisis is something Vino Joy News will continue to monitor.
–Writing by Morris Cai and Natalie Wang
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