Wine Bottle Co

The Wine Group to acquire Australia's giant Loxton winery

The facility, which produces the equivalent of 7.5 million cases of wine annually, was established in 1948 and is said to be Australia's fourth-largest winery.

Terms weren't announced for the deal, which is expected to close Aug. 18.

The addition of Loxton, located in the Riverland region, in the so-called central east portion of South Australia, will augment The Wine Group's existing Griffith winery, officials said, providing "incremental capacity to support the growth of the company’s portfolio of fast growing Australian wine brands and expand (its) high-quality Australian bulk wine offerings to its global network of bottlers."

The Riverland region is one of the Land Down Under's leading wine producing areas.

The company's Australian-sourced brands include Fish Eye, Foxhorn, and Little Roo. Fish Eye has won the Impact “Hot Brand” award every year since its 2004 launch, The Wine Group notes, while Foxhorn is America’s top "popular-priced Australian brand," according to the company.

David Kent , The Wine Group's chief executive, said Ross Mayfield , plant manager at the Griffith winery, will serve as director of Australia operations on an interim basis and supervise all of the company's Australia-based wineries, reporting to Steve Roden , The Wine Group's vice president of operations.

The Wine Group, which is based in San Francisco but also has company offices in Livermore, produces wine brands including Franzia, Cupcake, Concannon, Big House, Almaden, Corbett Canyon, Foxhorn, Fish Eye and flipflop. It was founded in 1981 through a management buyout of the wine assets of The Coca Cola Bottling Company of New York, and is reportedly the world’s third largest wine producer by volume.

SA wine bottling industry in economic decline | POPAI South Africa

The Simondium bottling plant of FirstCape Vineyards, the biggest exporter of SA wine to the UK, stands idle, with 25 workers laid off.

Two years ago, 30m bottles of wine were bottled locally by FirstCape. Today all of that business has gone offshore. The wine is exported in bulk and bottled in the UK, saving exporters up to R1/bottle in bottling and packaging charges at the current rand exchange rate.

But the UK’s gain is SA’s loss. It means 30m fewer glass bottles were sold by Consol Glass last year, 30m fewer screw caps were sold by MCG Industries, and more than 60m fewer labels were sold by Rotolabel.

Several other bottling plants are being closed or mothballed. Just outside Stellenbosch, The Company of Wine People is closing its plant and retrenching close on 70 people. Its volumes have halved in two years following the loss of two big accounts that have switched to bulk exports, according to sales and marketing director Chris O’Shea.

The losses across the main players in the packaging industry easily exceed R300m over the past 18 months, says Consol Glass sales and marketing director Dale Carolin.

He says Consol’s wine bottle sales have dived 20% over the past year because of the growing trend for wine exporters to shift out of glass bottles into bulk exports. Nampak Wiegand Glass reports the same experience and is considering retrenchments.

In 2005, only 32% of wine exports left SA in bulk format and it was typically low-value wine. But by June 2011, this had reached 45,6% — a rise of over 65m litres. Higher-value, branded products are increasingly going this route.

SA Wine Industry Information Systems (Sawis) estimates that for every 10m litres of wine displaced from bottles into bulk shipments, about 107 local jobs are lost.

Though wine producers express regret about the harm they are causing to the packaging industry, their decision to move into bulk exports is driven purely by economics. The main catalyst is the strength of the rand, which is currently 20% overvalued on some measures.

Many players also blame the rapid rise in other input costs common to all manufacturing processes, like annual electricity hikes of 25% and above-inflation wage demands.

Nampak Wiegand Glass’s wine bottle price increases have been well below 5% for the past two years. “Our costs are driven by electricity, transport and gas prices as well as labour increases,” says MD Stoney Steenkamp. “It’s clear we’ve under-recovered on our costs to assist the wine industry.

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