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Newly formed Australian wine giant Vinarchy hopes that demand for brands like Canada’s Jacob’s Creek and Latin American Campo Viejo will benefit from trade tensions between the US and its neighbors, replacing American wine sales.
Australian praise wine merged with Pernod Ricard’s wine business to create the world’s second largest specialized wine producer in a deal and name change finalized last month.
The Adelaide-based company generates $1.5 billion in revenue per year, employs 1,600 people, and has 11 wineries in Australia, New Zealand, South Africa and Spain.
“The (merger) will put us in Paul’s position to address the challenges we face in the industry,” executive chair Ben Clark told the Financial Times, referring to the demand and geopolitical tensions that hit China in 2020, which hit Australian wine with punitive tariffs.
The Bain-led consortium was in debt on loans as winemakers, which Carlisle bought for $1 billion (US$640 million) in 2018 dominated the accolades last year, and the industry struggled. It then privately acquired Pernod Ricard’s Australian and New Zealand operations.
Clark pointed out Canada. Canada is not in favor of US alcohol in response to Donald Trump’s tariffs. “At this point, we don’t have much of our wine on the Canadian shelves, so we can take advantage of it,” he said.
Wine Australian trade group says it is already a strong Canadian seller alongside Hardy’s and Campoviejo, one of Vinalky’s three major brands, with Australian wines accounting for 16% of the US and South Africa.
Clark said Spanish wine brands will also appeal to Latin American customers.
Chair called it “troubling but manageable” about the Trump administration’s 10% tariff levies on Australian goods.
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The US tax comes when wine sales to China began to boom after Beijing lifted its 2020 tariffs last year. Wine Australia reported last week that the value of its exports had risen to $2.6 billion, up to 41% of the year to March, due to resuming trade with China.
More than $1 billion of wine was shipped to China during the year, albeit in a lower amount than before the tariffs were introduced, according to the trade agency.
Clark said there is an opportunity for growth in China, but demand from countries such as Japan, South Korea and Thailand remains strong. Australian producers expanded into these markets after China’s demand stagnated.
Vinarchy’s chairman said the new winemaker will focus on consolidating the merged companies and emissions dozens of small, unprofitable brands in the process, but it also aims to expand through acquisitions.
“We see real opportunities in the world’s wine,” he said.
