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Vinarchy, the newly formed Australian wine giant, expects to benefit from trade tensions between the US and its neighbours as demand for brands such as Jacob’s Creek in Canada and Campo Viejo in Latin America replaces sales of American wine.
Australia’s Accolade Wines merged with Pernod Ricard’s wine operations to create the second-largest specialist wine producer in the world, in a deal and name change finalised last month.
The Adelaide-based company has annual revenues of $1.5bn and employs 1,600 people, with 11 wineries in Australia, New Zealand, South Africa and Spain.
“[The merger] puts us in pole position to deal with the challenges we as an industry face,” executive chair Ben Clarke told the Financial Times, referring to weak demand and geopolitical tensions that have included China slapping punitive tariffs on Australian wine in 2020.
A Bain-led consortium took control of Accolade last year after the winemaker, which Carlyle bought for A$1bn (US$640mn) in 2018, defaulted on a loan as the industry struggled. It then acquired Pernod Ricard’s Australian and New Zealand operations for an undisclosed amount.
Clarke pointed to Canada, where US alcohol is out of favour in reaction to Donald Trump’s tariffs. “There’s not many bottles of US wines on the shelves in Canada at the moment, so we can take advantage of that,” he said.
Jacob’s Creek, one of Vinarchy’s three main brands alongside Hardys and Campo Viejo, is already a strong seller in Canada, where Australian wine accounts for 16 per cent of volumes — similar to the US and South Africa — according to the Wine Australia trade body.
Clarke said its Spanish wine brands would also appeal to Latin American customers.
The chair was phlegmatic about the imposition of a 10 per cent tariff on Australian goods by the Trump administration, calling it “awkward but manageable”.
The US levies come as wine sales to China have begun to boom after Beijing lifted the 2020 tariffs last year. Wine Australia reported last week that the value of exports had risen 41 per cent to A$2.6bn in the year to March, driven by the resumption of trade with China.
More than A$1bn of wine was shipped to China during the year, albeit at lower volumes than before the tariffs were introduced, according to the trade body.
Clarke said there was a growth opportunity in China, but demand from countries such as Japan, South Korea and Thailand remained strong. Australian producers expanded into those markets after Chinese demand stalled.
The Vinarchy chair said the new winemaker would focus on integrating the merged companies, shedding dozens of smaller and unprofitable brands in the process, but it would also look to expand through acquisitions.
“We see real opportunities in global wine,” he said.
