Still fortified, Buller family seeks buyer as winery trading continues
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.
Frequently Asked Questions about this Article…
Buller Wines was placed into voluntary administration earlier this month. The Buller family has engaged administrators and is looking for investors or a buyer for the vineyard because, despite being a long‑standing fortified‑wine producer, the business isn’t generating enough cash to cover overheads, reinvest or fund expansion.
Yes. The winery will continue operating under administration until a second creditors’ meeting in six months, pending court approval for an extension. Some events, such as the annual Rock the Vines concert, are under review as part of the administration process.
Deloitte is acting as administrator, led publicly by Sal Algerim. They’re looking at trying to sell the business in its entirety — a process that may take time — or alternatively selling some inventory to generate substantial income without having to sell the whole business.
Creditors were told Buller Wines is profitable and that assets exceed liabilities, but the business isn’t making enough money to cover overheads, reinvest or support expansion. Major pressures include a strong Australian dollar that has pushed up export prices in Europe and the US, and an oversupply of grapes and wine in Australia creating fierce competition.
The company has about $9 million of inventory (including wine, barrels and raw materials) and two properties estimated to be worth more than $5 million combined. Those properties are secured to ANZ, which is owed about $4 million.
The industry has faced a long wine glut — industry figures say it’s lasted at least 10 years — which has reduced demand in traditional markets while emerging markets haven’t fully absorbed the excess. For investors, this means caution: strong brands with good distribution are better placed to recover, but wineries with current financial problems face immediate challenges.
Industry experts expect export markets to pick up within a year or two for wineries that have strong brands and solid distribution networks. However, that recovery timeline may not help wineries that are already facing acute financial difficulties today.
Based on the administrator’s comments, potential buyers or investors can expect a process that may include a full‑business sale (which takes time) or opportunities to buy inventory. Creditors’ meetings and court approvals will shape timing, and anybody interested should monitor administrator updates and creditor outcomes during the six‑month administration period.
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