Wine exporter keeps eyes open for expansion

The NZAX-listed New Zealand Wine Co is keeping a close eye on potential acquisitions and mergers in what it calls an overcrowded wine industry.

It is also considering moving its shares to the NZX because of a lack of interest in the NZAX.

The Marlborough-based exporter - which has the Grove Mill brand - yesterday reported a 13 per cent lift in tax paid profit to $1.02 million in the year to June.

Chairman Mark Peters said the firm was actively monitoring potential acquisitions and mergers.

"There is no doubt in my mind that there are too many small wineries competing for a small number of efficient distribution channels and some consolidation in ensuing years is vital for the well-being of the industry."

Asked how big NZ Wine might get, Peters said: "As big as it takes to be efficient."

NZ Wine has total assets of just under $30 million and Peters said no upper limit was being set on how much larger the company would get.

It was a definite possibility that it could join the select group of category 3 winemakers selling more than two million litres a year

He said NZ Wine wanted to maintain its distribution channels and ensure it had enough supplies to grow. It is undertaking more planting shortly but acquisitions and mergers may be another path to growth.

"We will be keeping a close eye on things and, if we do see some possibilities, we will be quite prepared to make the approaches ourselves."

NZ Wine was forecasting tax paid profit would increase 56 per cent to $1.6 million this year.

However, Peters said the performance of the NZAX and interest in it had been "somewhat underwhelming" and the board was considering moving to the NZX.

CEO Rob White said the US had replaced the UK as the company's biggest export market based around the relationship with importer Palm Bay. Peters said a long-term distribution agreement with Palm Bay was being finalised.

On the domestic front, White said the market would remain "tight" given the "changing face of liquor retailing" as a result of Woolworths Australia buying Progressive and the Warehouse entering the market. NZ Wine shares closed yesterday at $2.16.