1988 has been an extraordinary year for Hunter Valley-based entrepreneur, Brian McGuigan. Not only has he topped the world as Most Successful Exhibitor at an important international wine competition, collected an Order of Australia in the Queen’s Birthday Honours, but his recent vineyard development project has met with unqualified successs by raising a cool $26 million. This money will double his vineyard size, and will further entrench his position as the major vineyard owner-developer in the Hunter Valley district of New South Wales. The outstanding success of his latest development, in which he attracted investment both from Australia and overseas, has enabled McGuigan to create and secure large plantings of premium varieties to match the increasing production and demand for his Wyndham Estate umbrella of wine companies. “We needed loads of money, for the development of vineyards, the processing of fruit, storing the wine, and for the finance of the whole show. Our new company, The Australian Viticultural Trust, will lease approximately 1189 acres of developed vineyards from Wyndham Estates, and 1165 acres of new vineyards from unrelated third parties. “We raised the $26 million by selling units of $10,000 each in The Australian Viticultural Trust. The Trust provides subscription monies for the leasing of the vineyards, giving a guaranteed minimum return of $11,960 between years five an seven of the twelve-year commitment. This scheme was the first of its kind in the wine industry anywhere. Wyndham now faces a barrage of enquiries from other wine companies desperate to ensure their supply of quality fruit by following a similar pattern. The reasons for the new interest are several. “For too long the winemaker has screwed the grapegrower up hill and down dale, which has led to difficulties for the industry to get the desired varieties when they’re needed.” This way the grapegrower has a guarantee, and how many people are offering that for twelve years? The plan is to build vineyards and to tie up their production for twelve years, allowing Wyndham to expand in areas where they couldn’t previously, through a lack of the premium varieties chardonnay, pinot noir and to lesser extent, cabernet sauvignon. “Australia needs more of right varieties planted”, continues McGuigan, “and we must satisfy the demand. Our system gives individuals a tax deduction for their investment, and a guaranteed income. The only variables are the seasons themselves, but we do offer a guaranteed return.” The scale of Brian McGuigan’s operations are already considerable, although most wine enthusiasts wouldn’t be aware. He has secured his fingers into a number of winemaking pies, all under the Wyndham Estate banner. His combined group of wine companies crushed 12,000 tonnes in 1988, including the largest vintage of any winery in the Hunter. Although it adds up to 2.5% of the entire Australian crush, McGuigan believes it’s not very much, really, and has planned to effectively double its size in seven years or so. McGuigan’s new vineyards will be planted in the Hunter Valley, Mudgee and Cowra. The payment system he has developed is quite unique. The base price of the fruit bought by Wyndham increases each year in proportion to the increase across the board of the wholesale prices of the various wines marketed under the Wyndham banner. Good varieties and prices are therefore balanced by poor, but the average price increases for the Wyndham group over the last ten years has been 13% per annum, which isn’t a bad carrot. According to Wyndham’s calculations, on the worst-case- possible scenario, a return of 24.1% pre-tax and ungeared per annum is anticipated. But using more realistic assumptions, they claim that investors will generate pre-tax ungeared returns of 28.4% per annum. “It’s important for the grower to take an active interest in the rest of the company”, says McGuigan. “It should be the aspiration of the grower to give the right quality of fruit, to therefore increase the wholesale price of the company’s wine.” That’s a nice little incentive to grow the stuff well, isn’t it?
