SA vineyards up for sale as downturn puts the squeeze on wineries
An oversupply of grapes, changes in retail conditions, overseas competition and the strong Australian dollar are the key reasons Cheviot Kirribilly Vineyard Property Group (CKP) is selling its 953-hectare South Australian vineyard portfolio.
Cheviot is one of several vineyard owners forced to sell this year due to the deteriorating market conditions.
“When CKP group … was conceived, there was a greater equilibrium of grape supply and demand and the ability to sell fruit on multi-year supply contracts to established winemakers,” Cheviot said in an ASX note dated July 13.
According to CKP, the return-on-capital model that the industry has operated under for the past 15 years has broken down.
“In crude terms grape growers must now ‘find a route to market’ for their products,” Chevriot says in its ASX note.
The properties are being marketed by Colliers agents Tim Altschwager and Nick Dean, with expressions of interest closing on August 16.
Cheviot Kirribilly Vineyard Portfolio | |||
Property | Region | Total Area (approx.) | Vineyard Area (approx.) |
Kirribilly Estate Stage 1 | Clare Valley | 251ha | 214.81ha |
Tullymore Vineyard | Clare Valley | 199.90ha | 148.83ha |
Angas Creek Vineyard Stage 1 | Adelaide Hills | 78.01ha | 59.48ha |
Angas Creek Vineyard Stage 2 | Adelaide Hills | 64.56ha | 48.34ha |
Birchmores Vineyard | Langhorne Creek | 293.44ha | 268.15ha |
Woodstock Road Vineyard | Langhorne Creek | 66.80ha | 41.17ha |
TOTAL PORTFOLIO |
| 953ha | 780ha |
Source: Colliers
“Due to the quality of the portfolio and premium locations within regional South Australia, we expect strong interest from offshore investors, particularly those that are looking for an established vineyard asset, strategically positioned in relation to the other tourist destinations including the city of Adelaide,” Altschwager says.
In the week since beginning to field expressions of interest, Dean says inquiries have been restricted to local industry participants.
As a general rule, he says vineyards have been selling at discounts of 30% to 50% off the values achieved four years ago.
CKP has not disclosed sales prices or valuations but expects “sales prices will be well below the last public valuations provided in June 2009”.
In June 2009 Knight Frank valued the six vineyards at $42.3 million, a reduction of $3.2 million (7%) due to conditions prevailing in the industry at the time.
Dean says the market is now improving but it is still a buyers’ market.
“The market is coming off a very low base. This time last year there was no market,” he says.
“There is an important segment of buyers who think things won’t get any worse.”
The CKP portfolio consists of six vineyards, the biggest being the 293-hectare Birchmores Vineyard in Langhorne Creek.
The portfolio is for sale by private treaty either as a whole or as separate vineyards, with expressions of interest closing August 16 at 11am.
Each of the vineyards have natural (Adelaide Hills) or licensed water rights (Clare and Langhorne Creek). Dean says location and water assets are important to investors.
“The Langhorne Creek vineyards are highly efficient producers of good-quality fruit, the Adelaide Hills vineyards are renowned for their chardonnay and sauvignon blancs, while the Clare Valley vineyards are efficient producers based in cool climates,” Dean says.
Dean and Altschwager would not reveal price expectations for the South Australian properties, but price expectations for the 45-hectare Pettavel vineyard in Victoria, being sold by Knight Frank agents Michael Hede and Leigh Morris on behalf of receivers, are between $5 million and $6 million
Prices of between $2 million and $3 million are expected for the 129 hectare Strathmore Vineyard also being sold by Hede and Morris.