Woolies looks to swallow collapsed Barossa Valley winery

A Barossa Valley winery currently in receivership may have a buyer in the unlikely form of supermarket giant Woolworths.

Australia's largest liquor retailer attempted to buy Barossa Valley Estates for $13 million before receivers were appointed in January, according to a report in The Australian Financial Review.

The move would further strengthen Woolworths' market power and allow it to control its wine from the vine to sale.

Receivers McGrath Nicol announced the sale of Barossa Valley Estates as a going concern and advertised for expressions of interest in newspapers today.

However, a spokesperson for McGrath Nicol told SmartCompany the receivers could not comment on whether Woolworths had expressed interest or made an earlier offer to buy the winery.

"We don't comment on rumour and speculation," the spokesperson said.

A spokesperson for Woolworths was also reluctant to comment on whether the retailer had made an offer on the winery.
The spokesperson confirmed Woolworths has an existing relationship with Barossa Valley Estates.

"Barossa Valley Estates is a key partner and acts as an overflow facility for our Dorrien winery business," the spokesman said.

"The fruit we process is from our long-term contracted grower base."

A purchase by Woolworths would further threaten independent producers, according to Andre Eikmeier, who sold his wine site Vinomofo to Catch of the Day last year.

"It would be a really sad state of affairs to see Woolworths buy that unless they had a genuine interest in preserving the production facility and the brand and the location," he says.

"I can't imagine Woolworths being terribly interested about production or tourism but it is probably excited about owning E&E Black Pepper and the Ebenezer Shiraz brand or a lot of the strong brands that Barossa Valley Estates has established."

But Eikmeier says the move to buy the winery would not be "an enormous departure" for Woolworths and says the winery was probably already "very beholden" to the retailer, which owns Dan Murphy, BWS and Woolworths Liquor.

"They have long established their involvement by setting up their own brands and by acquiring brands, so in that way they have become their own producer," he says.

While the industry has suffered with the collapse of Barossa Valley Estates and the recent collapse of Buller Wines, Eikmeier says other parts of the wine industry are resilient.

"I think whenever there is a period of imbalance of demand and other forces affecting that, you are going to get the smart operators who are going to continue to thrive," he says.

"We are going from strength to strength so that is good. I just want to see producers get more independence and get control of their direct to consumer channel," he says.

Source: Smart Company, 28 February 2013