By Ian Neubauer

ASX-listed Global Wine Ventures (GWV) has signed an agreement to acquire Yarra Valley winemaker Sticks as part of a new ‘consolidation’ strategy.

The $10m price tag GWV agreed to pay for the company will add 24.5 hectares of vineyards, a bottling plant and a 4000-tonne capacity winery to the GWV portfolio.

GWV managing director Sam Atkins said Sticks was chosen among a range of investment opportunities because it offered the integrated model the company was seeking. “We looked at 15 to 18 projects and Sticks is the one we chose to pursue for the fact that it had various income streams,” Atkins said. “It’s fully integrated from vineyard to the store and has a bottling plant in the middle.”

GWV was born from the ashes of Xanadu, a WA-based company that first listed on the ASX in 2000. Xanadu enjoyed a brief phase of rapid growth through managed investment schemes linked to the wine industry. But Xanadu struck trouble winding up its schemes and posted a $6.2m loss in 2003 before writing off another $3.7m loss in the December half of that year.

Atkins, who came on board in 2002, engineered a share buyback to end a particularly troubled scheme, much to the chagrin of dissenting investors. Atkins told The Sydney Morning Herald at the time that the buyback would improve cash flow by $600,000 in 2004 and up to $750,000 in 2011. Yet Xanadu kept on losing money hand over fist and over the next few years sold off its Normans, Xanadu and NXG brands in what Atkins describes as “a period of divestment”.

“We choose to strip the company down to a skeleton staff and start again with the public shell of the company. The idea was to pay off our debts and recapitalise so we would be ready when things in the industry started looking up. And upon selling Xanadu we changed the name to Global Wine Ventures,” he said. “Now it’s about consolidation. We want to spend the right amount of time to make Sticks work well in a public structure. After that it will be about further acquisitions.”

GWV operates from an office in North Adelaide. The company has one existing label in its books, a small brand called Cowrock that last year netted $995,000 in sales. But extraordinary expenses (GWV has only two employees and its website is under construction) saw the company post a $450,000 loss in the December half of 2006 and what Atkins called a “small” profit in 2007.

GWV shares fell 12 per cent in value to 6.5 cents following the announcement of the Sticks acquisition, but bounced back today before closing at 7.4 cents per share.

The Shout Team

The leading online news service for Australia's beer, wine, spirits and hospitality industries.

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