Taylors abandons talks to buy labels from Treasury Wine Estates

Taylors Wines has pulled out of talks to acquire labels from Treasury Wine Estates but is still in the hunt for acquisitions.

Taylors Wines managing director Mitchell Taylor. Picture: Supplied

Taylors Wines has pulled out of talks to acquire a portfolio of labels from Treasury Wine Estates, but managing director Mitchell Taylor says further consolidation in the industry is likely and his company is ready to pounce when the right opportunities emerge.

Vineyard and winery assets have poured onto the market in the aftermath of the damaging Chinese tariffs, which paralysed the Australian industry for three years before being lifted in March.

Taylors Wines, a large private producer based in South Australia’s Clare Valley, confirmed in October it was running the rule over some of Treasury’s commercial wine brands – including Wolf Blass, Lindeman’s, Yellowglen and Blossom Hill – which the ASX-listed group has been looking to exit from.

Affordable entry-level labels have borne the brunt of the Chinese absence from the market and changes to global consumption habits which have seen drinkers turn to higher quality alternatives and other types of alcohol, including spirits.

Mr Taylor said that while the Treasury labels were not in line with his company’s own “premiumisation” push, he was looking at other opportunities in the market.

“We had a look but it wasn’t in line with our strategic intent, which is really at the premium end of the market,” he said.

“We’re more a cool climate style of winery based in the Clare Valley, but we’re also very interested in premium regions throughout Australia, and different styles of wine.

“We’re very interested in looking at some of the other premium regions outside of Clare – we do source a lot of fruit from regions like McLaren Vale and we’ve recently acquired a vineyard down in Wrattonbully where we feel there is great potential for the reds. So definitely, both high-quality vineyards and also high-quality brands, we’d be very interested as long as they would fit with our premiumisation strategy.”

Taylors Wines recently paid close to $2m for the Faraway vineyard – a mix of cabernet sauvignon, merlot and shiraz plantings – at Wrattonbully in South Australia’s Limestone Coast wine region.

Distressed assets like Fox Creek Wines in McLaren Vale are among the flood of individual vineyards and wineries currently on the market, while a consolidation of Australia’s larger corporate players has also been a feature of the post-tariff environment. Accolade Wines, which owns Hardys and Grant Burge, was sold to a Bain Capital-led consortium earlier this year. The consortium later agreed to buy Pernod Ricard’s Australian portfolio, which includes Jacob’s Creek, St Hugo, Orlando and ­George Wyndham.

Taylors Wines is one of the nation’s largest family-owned wine companies.

According to it its latest financial report filed with ASIC, the company generated $65.8m in sales revenue in the year to June, down 2.9 per cent from the previous year, as an improvement in domestic sales partially offset falls in exports to Asia, Europe and North America.

The company dipped to a $4.1m loss, down from a $3.3m profit, due to rising costs and an impairment of its vineyard assets.

Previously selling almost 20 per cent of its exports into the Chinese market, the company is now looking to get back up to the 30 shipping containers per year it was selling into the country – once a $1.2bn market for Australian winemakers – before tariffs were imposed in 2021.

“We do want to build back there, but we realise the market is not as buoyant as it was three years ago,” Mr Taylor said. “The GDP and the Chinese confidence is not there like it used to be. They’re very cautious, particularly because they’ve had a brutal Covid … and so they’re tending not to have that same level of discretionary spend like they used to.”

According to Wine Australia, exports to China reached $612m in the year to September, about half of its peak prior to the tariffs.

Mr Taylor said the company was also looking at other emerging export opportunities in Canada, Britain, South Korea, Japan and southeast Asia.