In the latest edition of Gourmet Traveller Wine, wine critic Jeremy Oliver discusses US-based equities firm Kohlberg Kravis Roberts’ (KKR) bid for Treasury Wine Estates (TWE). As you are no doubt aware, KKR has now joined forces with Rhone Capital and upped its offer to $5.20 a share, valuing the company well north of $3 billion.
Oliver suggests TWE shareholders think twice before accepting any offer given that the wine industry typically works on a 15 year business cycle and should peak again soon. While demand for wine in mainland China has slowed down dramatically, in the view of some commentators and industry insiders it doesn’t really matter because renewed growth in US wine demand will soon outstrip available supply.
On another note, while no-one disputes that Penfolds is the crown jewel in the TWE portfolio, Oliver notes that TWE ‘s other significant brand, Wolf Blass, actually outperforms Penfolds in key markets such as Europe and Canada! (Money Talks by Jeremy Oliver, Gourmet Traveller Wine, August/September 2014)
Chinese Wine Market Stumbles
Renowned wine critic Jancis Robinson believes that at least some of the weakness in the previously booming Chinese wine market is a sign that the wine market in China is maturing. While Chinese wine drinkers were once willing to pay almost anything for first-growth Bordeaux and other prestige wines, now Chinese wine drinkers have become “much cannier buyers and are experimenting with a much wider range of labels.”
President Xi Jinping’s crackdown on bribery and the gifting of luxury goods to government officials has also played a big role in dampening demand for top-end drops, but the good news, for Chinese wine buyers at least, is that wine industry players now have to make prices more competitive, work harder and be more … Read the rest