Still fortified, Buller family seeks buyer as winery trading continues
THE family behind well-known Rutherglen winery Buller Wines is looking for investors or buyers for their vineyard, after it was placed into voluntary administration earlier this month.
The winery will keep operating under administration until a second creditors' meeting is held in six months, pending court approval for an extension.
The winery's annual Rock the Vines concert, due to be held at the end of March, is under review as part of the administration process.
Buller is known for its fortified wines and has been producing since 1921. But like many Australian wineries, it is struggling to maintain exports because the strong dollar has pushed up prices in key markets such as Europe and the US. Compounding the problem, an oversupply of grapes and wine in Australia has created an excessively competitive environment.
"We are going to look at trying to secure a sale of the business in totality. That process will take time," administrator Sal Algerim of Deloitte said on Friday.
"Another option is to look at trying to [sell] some of the inventory. That will generate a substantial income that will not require the business to be sold."
The chairman of Wine Victoria and former chief executive of the Winemakers Federation of Australia, Stephen Strachan, said the wine glut had lasted at least 10 years.
Many Australian wineries are caught between a dropoff in demand from Europe and the US, and emerging markets across Asia not yet soaking up the shortfall.
"It is sad to see long-standing family companies go through difficulties, but at the same time this is an industry that is fluid and these changes will set us up for the future," Mr Strachan said.
He expects export markets to pick up within a year or two for wineries with strong brands and good distribution networks, but said this would not help wineries with financial problems today.
The Buller family company first contacted Deloitte in late October to discuss the vineyard's financial health and future cash flows.
At a creditors' meeting on Friday in Melbourne it emerged that Buller Wines was profitable and assets exceeded liabilities. But it was not making enough money to cover overheads, reinvest in the business or fund expansion.
There is about $9 million of inventory, including wine, barrels and raw materials, and two properties estimated to be worth more than $5 million secured to ANZ, which is owed about $4 million. The properties are in Rutherglen and Beverford, north of Swan Hill.