Troubled Orange-based wine company Reynolds is focusing its attention towards the US, where it ultimately expects to develop a stronger market than in the UK, where it has closed its office and found the discounting heat created by some Australian producers too extreme to compete against. The company launched its wines into the US in May 2002 and has developed an alliance with Trinchero Family Estate to build its brand there. Its chief executive, John Martini, came to Reynolds from Trichero, where he was intimately involved in establishing this relationship. At the company’s recent AGM he stated: ‘I believe the winery’s vineyards in Orange give the brand the most sharply defined geographic region of any major Australian brand!’ which suggests to me that he has a lot of learning to do. Because of the set-up costs associated with the US, where the company is now the 15th largest Australian importer, it does not expect any marketing profit contribution from this source until the next financial year. Reynolds did however increase its annual sales in 2002 to 241,353 cases, well ahead of 23,500 in the previous financial year. Reynolds has also written down A$3.145 million in the value of its bulk wines, and is involved with a A$8.1 million doubtful debt provision related to the sale of Cabonne Management Limited, which might be found to owe funds to CH Finance Pty Ltd, Reynolds’ finance subsidiary. It is CH Finance and Cabonne Management that the Australian Taxation Office (ATO) has been trying to wind up over a still ongoing dispute related to the payment of taxes. Reynolds, which is defending its position that it has actually overpaid its taxes, claims that this dispute has already cost it A$900,000 in consultancy fees. Reynolds’ chairman, Malcolm Irving, says that the best possible outcome would se the A$8.1 million provision being returned to the company’s accounts. The company expects the ATO to have made its future clearer by June 30 this year and has employed International Wine Consultants to restructure its financial operations.
