South Australian winery in receivership with $20 million in debts as industry pain continues

The troubled wine sector continues to suffer, with the South Australia-based group Barossa Valley Estate and its 41 hectare vineyard, now placed in receivership with reported debts of $20 million.

The development comes as the global wine market continues to suffer. A glut of grapes and lower export figures have caused trouble among Australian businesses, with businesses such as Casella Wines and Buller Wines recording financial trouble.

According to realcommercial.com.au there are at least 18 South Australian wineries up for sale including Coonawarra Premium Vineyards Project No. 1 & 2 with 309 hectares of predominantly red wine grape varieties.

McGrathNicol has confirmed the grower-owned Barossa Valley Estate business has been placed in receivership as of January 15. The business continues to trade as the receivers, Sam Davies and Rob Kirman, conduct an “urgent assessment”.

Davies said in a statement he’ll be working with contract growers and management to settle 2013 grape requirements, including exports. He said while it’s too early to discuss causes, he noted the business was undercapitalised.

The business will soon be put up for sale and McGrathNicol said in its statement the winery contains equipment to crush between 3,000 to 4,000 tonnes every year, with a 41 hectare vineyard along with a restaurant and function venue.

Barossa Valley Estate has a long history. The company began in 1984 after a group of grape farmers attempted to stick to growing Shiraz vines, instead of Chardonnay. In the 1990s, the group sold a 50% stake to beverage group Constellation, which eventually sold out in 2011. Full control reverted to the growing cooperative.

The collapse is yet another sign of the wine industry’s struggles, although Andre Eikmeier – who sold his wine site Vinomofo to Catch of the Day last year – says he’s surprised the industry has been as resilient as it has.

“The industry is actually remarkably robust, given the circumstances. There have been a lot fewer wineries folding than the environment might have dictated,” he says.

“There is really a sense that the supply and demand is balancing out.”

Some wine experts have suggested the wine glut is ending, which will in turn raise prices and provide smaller wineries with some relief.

More recently, Buller Wines in Victoria was placed in administration, while Casella Wines, the business behind one of Australia’s most successful wine exports, Yellow Tail, suffered a $30 million loss in 2011-12.

This article first appeared on Smartcompany.com.au.