Salena Estate falls into administration after failed bid to sell business

One of the country’s largest organic wineries has fallen into administration amid a deepening crisis facing Australian growers and wine producers.

Salena Estate has fallen into administration.

One of the country’s largest organic wineries has fallen into the hands of administrators after a failed bid to sell the business and amid a deepening crisis facing growers and producers across Australia’s inland regions.

Salena Estate, established by the Franchitto family in 1998, produces around 10,000 tonnes of predominantly red wine annually, selling the majority into export markets across Asia, the US and Europe.

China was previously a major customer before Chinese authorities imposed tariffs on Australian wine in 2020.

Administrators Tim Mableson and Ryan Eagle from KPMG were appointed last week to take control of the company, which operated from Bookpurnong, in South Australia’s Riverland region.

The Riverland, which accounts for more than a quarter of the nation’s annual grape crush, has been among the hardest hit regions as growers fight a growing glut of red wine.

Riverland grape growers were receiving about $600 a tonne in 2019, but that has dropped to as low as $120 due to the oversupply of red grapes, which has been exacerbated by changing consumer drinking trends.

Salena Estate’s collapses coincides with crisis talks held by industry group Riverland Wine last Wednesday, with more than 175 growers calling for state and federal support while they switch their crops to more popular varieties – a process that can take up to five years.

Mr Mableson said finding replacement markets for Salena Estate’s previous Chinese exports had proven an insurmountable challenge for the company, which would continue to trade as directors, Bob and Sylvia Franchitto, finalised a deed of company arrangement proposal which they planned to put to creditors.

A sale of the business is also being considered.

KPMG said it was too early to provide an estimate of debts owed by the company, but one industry source has suggested they could reach up to $20m.

Westpac, which is among the list of creditors, has appointed receivers from Heard Phillips Lieberenz to recover debts owed to it. Receiver Andrew Heard declined to comment.

The volume of production at Salena Estate makes it one of the top 20 Australian wine companies by total wine production.

It owns 191.5ha of vineyards across the main site at Bookpurnong, between Loxton and Berri, and at a second property at Lyrup, just outside Berri.

Varieties grown include Shiraz, Cabernet Sauvignon, Sangiovese, Petit Verdot and Chardonnay, and 121.4ha of the vineyards are certified organic.

Colliers Agribusiness was appointed to sell the business and properties in April last year, but a buyer could not be found.

A cellar door and restaurant, Cucina 837, which opened in October 2019, is also in the hands of administrators.

The first meeting of creditors will be held in Berri on March 5.

Grapes from the Riverland are primarily sold for bulk wine production, with the biggest intake going to Accolade Wines, which was recently taken over by Bain Capital-led consortium Australian Wine Holdco Limited.

On Monday Australian Vintage, the ASX-listed owner of the McGuigan, Nepenthe and Tempus Two brands confirmed it was in “exploratory discussions” with Accolade - the owner of the Hardys, Banrock Station and Petaluma brands - around a possible merger.