The oversupply, which is affecting growers in all Australian wine regions, is not stopping Barossa Vines from establishing what has been reported in The Weekly Times as being a managed investment scheme (MIS). Barossa Grape and Wine Association chief executive Sam Holmes is concerned that any development will simply add to the current pressure on existing Barossa growers. While he argues that some MIS operations are dedicated to reducing costs and providing wineries with the fruit they need in a profitable manner, other such schemes represent risks to investors and to the industry. ‘Investors should do their homework first’, he says. ‘They should check on the business model and contracts of the operator. Some prospectuses predict management fees being covered by the income generated by the crop, with the proviso that if they are not, the investors are required to reach back into their pockets. If the business model is based on tax breaks and not a (contracted) end use for the fruit, it’s a dead end game.’ Holmes is keen to stress that if the contract is not with an external party, but with an entity related to the scheme itself, this should be clearly disclosed, allowing the potential investor to consider the operation as a whole.
