WELLINGTON: New Zealand premium wine and an improved economy have boosted by 19 percent in North American sales to 425,000 cases for New Zealand’s largest listed wine company, Delegate Group.
The Auckland-based company confirmed record operating profit of $20.5 million for the six months ending December 31, up 2 per cent from $20.2 million in the previous corresponding period, following a 4 per cent rise in global case sales to 1.13 million.
North America became the company’s biggest market last year ahead of Australia and New Zealand and managing director Graeme Lord said there was a lot more growth potential in that market. “The US premium wine market is growing in strength, so it’s also a market growth dynamic with more US consumers attracted to premium wine, they’re trading up to higher quality,” Lord said.
Chardonnay remains the dominant varietal in North America but there was opportunity to make consumers more aware of sauvignon blanc and Delegat’s Oyster Bay brand which has become the leading brand for the category in New York and Massachussets and southern California, he said. Delegat posted a 45 per cent drop in first-half profit, mainly caused by a $10.7 million writedown of its vines and grapes and losses on derivative instruments used to limit its foreign currency exposure.
Additional borrowings of $30 million were drawn down to fund the increased capital investment during the six months, with net debt sitting at $179.4 million, up 17 per cent on the previous corresponding period. The directors say the group is on target to achieve global case sales for the full year of 2.2 million, up 9 per cent on last year and to achieve operating net profit after tax of $34 million, also up 9 per cent. Lord said the 2015 harvest, due in three weeks, looks like it will be a quality vintage but the overall industry yields are likely to be down on the record 445,000 tonnes of grapes achieved last year, which was well up ahead of the 345,000 tonnes in 2013.
