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A Bain-led consortium has taken over Australia’s second-largest winemaker, Accolade Wines, after it struggled to adapt to Chinese tariffs and a consumer shift away from lower-priced brands.
The company behind brands such as Hardys Wines and Banrock Station was bought by Carlyle in 2018 for A$1 billion ($660 million) at a time when private equity bidders were targeting Australian wine companies.
But Accolade has been hit by the damaging impact of the Covid-19 pandemic on the hospitality sector, the introduction of punitive Chinese tariffs on Australian wine in 2020 and the shift of many consumers to more expensive wines.
“Accolade Wines has a long and proud Australian history as a world-class wine producer and we hope it will remain so for many decades to come. We hope that this restructuring creates a more secure long-term future for the company,” said a spokesperson for the consortium.
“Like all Australian wine producers, we have been hit by a number of macroeconomic and industry challenges in recent years,” said Robert Foye, chief executive of Accolade Wines. “Our ability to respond to these challenges and grow has been hampered by an unsustainable balance sheet.”
Accolade, which the company says has a loan of almost A$600 million due in 2025, is struggling to service its debts. The new owners, led by Bain’s special situations unit, bought Accolade’s debt at a deep discount and hope to complete the company’s recapitalization by mid-year. The company has begun discussions with South Australian grape suppliers to renegotiate supply contracts.
Called Australian Wine Holdco, the consortium also includes asset managers Intermediate Capital Group, Capital Four, Sona Asset Management and Samuel Terry Asset Management.
Accolade has already sold smaller brands, including its Tasmanian Bay of Fires vineyard, to reduce its debt. Analysts said the restructured company will likely be a consolidation target for a large commercial buyer or private equity firm.
Australian wine producers are preparing for the reopening of the Chinese market, once a driver of industry growth, after a 2020 tariff review was triggered late last year.
The review followed a state visit by Australian Prime Minister Anthony Albanese to China in November and the resumption of trade in other products that had been disrupted after then-Australian leader Scott Morrison called for an investigation into the origins of Covid -19.
Australian wine companies, including Treasury Wine Estates and Accolade, have turned to other markets in Southeast Asia and North America to make up for the loss of Chinese sales. Last year Accolade struck a deal with basketball player James Harden to launch a signature wine collection to drive sales in the United States.