Thursday 14 November 2019

Woolies buys Chapel Hill, ‘intends to participate in production side’ of Australian wine

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Woolworths’ Endeavour Drinks has bought prized McLaren Vale winery Chapel Hill from Switzerland’s billionaire Schmidheiny family.

As reported in our Friday newsletter The Week That Was, the sale is believed to have occurred in July but Woolworths only confirmed the news this morning.

According to a report in The Australian Financial Review, Endeavour Drinks has created a new wine division called Paragon Wine Estates for its “growing portfolio of brands” including Krondorf and Riddoch.

“We have been selling a lot of Chapel Hill wine over the last five years – our customers love it – and it’s a lovely complement to a portfolio of really important brands that we’re privileged to have in our suite of brands,” Endeavour Drinks managing director Steve Donohue told The Australian Financial Review.

Mr Donohue said the Chapel Hill acquisition was an “important step” in enhancing the wine business before the proposed merger with Woolworths’ hotel and gaming business, ALH, and the demerger of the combined liquor, hotel and gaming operations in 2020.

“We’re able to demonstrate to the industry the seriousness of our commitment and the extent to which we intend to participate in the production side.”

The Australian Financial Review said that Mr Donohue, Woolworths chief operating officer David Marr and company secretary Marcin Firek joined the board of Chapel Hill this week.

Chief winemaker and chief executive Michael Fragos said “the existing team would stay with the company and relationships with grapegrowers would not change”.

Retail and marketing executive Bodhi Edwards left the winery in late July.

Swiss billionaire Thomas Schmidheiny, who has an estimated net worth of US$4.1 billion, has owned Chapel Hill since 2000.

He told The Seattle Times in 2014 that he had overpaid for the winery just before overplanting in Australia led to “a lake of grapes”.

“That pushed prices down, and we were a victim,” he said. “But now it’s doing reasonably well in a difficult maket. The lake is going down.”

He told the newspaper that Chapel Hill was a challenge to oversee.

“For two days’ work, it’s a week’s travel,” Schmidheiny said. “We are not very happy about the results, but we are happy about the quality of the wine.”

Two months ago Schmidheiny cut his stake in Swiss cement maker LafargeHolcim to 7.2 percent from 10.9 percent to diversify his investment portfolio.

Schmidheiny, 73, said the decision was part of his “careful retirement and heritage planning”.

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