Delegat's looks to increase presence
Wine company Delegat's is looking at buying more bare land in Marlborough, in the wake of increasing wine sales in North America.
Oyster Bay wines are becoming a favourite with North American palates, contributing to a 31 per cent increase in first-half net profit for the listed winemaker.
Yesterday the group reported net profit for the six months to December 31 of $19.3 million, sending its NZX share price up 1.2 per cent to close at $3.35.
Operating profit - excluding fair value adjustments - was up 10 per cent year-on-year to $19.2m.
Revenue from sales rose 4 per cent to $123.4m, with case sales up 7 per cent to 1.09 million cases. Case sales in North America shot up 30 per cent to 309,000.
Managing director Jim Delegat said distribution of its wines there "had opened up incredibly".
Californians would buy more than 50,000 cases of Oyster Bay wines this year, he predicted. It was the No 1 New Zealand wine in Florida, "and we're the biggest-selling sauvignon blanc in New York now".
Delegat's has bought a vineyard and land in Marlborough, and vineyards in Hawke's Bay's Gimblett Gravels sub-region, including Matariki Group.
Mr Delegat said it was evaluating other "bare land" prospects in Marlborough.
The grape growing season had been exceptional for volume and quality, he said, and he expected the group to harvest at least 28,000 tonnes - up on last year's 20,000.
That would boost its low inventory.
Case sales in New Zealand, Australia and the Asia-Pacific region slipped 3 per cent, but that was largely a timing issue, he said.
Case sales in Britain, Ireland and Europe rose 2 per cent, despite price rises in Ireland and Britain.
"We are selling more wine [in Britain] at higher prices than we expected to. Oyster Bay is the brand people like to be seen with when they're entertaining."
But the group's case price realisation fell from $116.4 per case to $113.20, largely thanks to adverse foreign exchange movements.
Operating expenses were flat, while gross operating margin held steady at 59 per cent.
The group said it still expected full-year profit to be $27m, reflecting in part a traditional slowing of sales in the second half.
Forsyth Barr head of private wealth research Rob Mercer said Delegat's had a strong balance sheet, a strong and well-controlled export brand in Oyster Bay, growing markets, and a good balance between in-house and contract grape production.
"They're buying acreage today at a relatively low price . . . and effectively reducing their exposure to grape prices as they recover. Delegat's is well positioned to continue to grow steadily."
Mr Delegat said wine consumption was tipped to grow steadily in Britain and rocket in the United States and Asia, but a global wine shortage was on the way. Fairfax NZ
The Marlborough Express