One of the most energetic of Australia’s family-owned wineries has decided to issue shares to raise $12 million prior to floating on the Australian stock exchange next month. In the process, Cranswick Estate will become known as Cranswick Estate Wines Limited. A number of businesses in Australian wine have decided to take similar steps to fund their growth plans and to capture the mood of excitement evident in financial circles when the wine industry is mentioned. It is interesting to note that while several plans currently seeking to raise capital for excellent vineyard developments, especially in Victoria, are struggling for funds, other schemes in NSW and also Victoria, appear to have attracted funding on a basis one might equate more to the emotion of their sales pitch than to the economic imperatives underpinning any return on investment. Cranswick Estate has been a strong and aggressive maker and marketer of wine with a well-established international business. It is Australia’s 17th largest wine maker, yet the country’s 7th largest exporter, a result of its canny entry into important overseas markets well before the country’s present export drive gathered its current and spiralling momentum. The sixteen countries which receive Cranswick Estate wine are found in Europe, North America, South-East Asia, the Middle East and include Japan and the UK, where the company’s export-orientated Barramundi range has become widely successful. Cranwsick Estate’s exports accounted for a massive 63% of revenue in 1996. Project underwriters Equity Underwriters Limited and D&D Tolhurst Ltd value the Riverina-based company at $27.46 million. The public are to be offered 10 million ordinary shares of 20 cents par value at an issue price of $1.20 per share, equal to 43.7% of the company’s value. According to Graham Cranswick-Smith, Cranswick Estate’s managing director, the money raised will both retire debt and fund the next stage of the company’s expansion. Further development of the 445 ha Cocoparra vineyard near company’s base at Griffith will provide the material for future export expansion and to support the company’s recently-released range of bottled wine for the Australian market. In my view, these wines are sound and well-made. In the eyes of Mildara Blass they must be something to be envied, if the imitation range released under the Mildara Blass ‘Stellar’ label is anything to go by. The real jewel in the Cranswick crown is is Autumn Gold Botrytis Semillon, another consistent multi trophy-winner on the Australian show circuit. A less luscious and fleshy style than the more celebrated Noble One from De Bortoli, it is, I believe, one of the top five dessert wines of Australia. The wine sells at around $20 per half bottle, well above the other Cranswick ranges which are priced at $10-12 and $15-16. One of the strengths behind Cranswick’s float is the appointment of Ian Mackley, a former chief executive of the Penfolds Wine Group, as chairman. Colin Henson, a former Group Finance Director of Tooth & Co, is a second external director. Graham Cranswick-Smith believes his company’s on-site technology including its own bottling line and sophisticated drip irrigation vineyard, plus its existing marketing strengths in several major markets, give it a number of significant advantages. If you are interested in wine industry investment, this should be one of the prospectuses well worth looking at.
