Woolies pursues in-house wine production prospects in the Barossa Valley
Australia’s largest liquor retailer, Woolworths, is considering buying the collapsed Barossa Valley Estates winery, but faces likely competition from China’s COFCO.
The Australian Financial Review has reported the move is likely to anger grape growers fearful of the retail chain’s growing market power.
The report also suggests the direct ownership of wineries could trigger the interest of the Australian Competition and Consumer Commission, which is already investigating alleged abuses of market power by Woolworths.
Wine industry sources told The AFR that Woolworths – which has BWS and Woolworths Liquor – attempted to buy Barossa Valley Estate at Marananga for $13 million before receivers were appointed in January.
Barossa Valley Estate has a 41-hectare vineyard and processing facilities capable of crushing up to 4,000 tonnes of grapes.
Owned by grape growers and investors, the current members of the 80 grower co-operative company was unable to secure fresh finance after breaching debt covenants last year, with receivers McGrathNicol currently seeking offers for the property.
Woolworths owns the direct liquor marketer Cellarmasters, which owns Dorrien Estates which makes small batches of wine labels sold directly through Cellarmasters.
Barossa Valley Estate currently acts as an overflow facility for the Dorrien winery business.
Wine industry sources told The AFR China’s COFCO officials have plans to release an Australian version of its Chinese wine label Great Wall and visited the Barossa Valley about a month ago.
