Australian Vintage has cancelled a long term lease on the Belvino-owned Balranald Riverina vineyard seven years ahead of its scheduled expiry date.
The decision, which was announced to the ASX yesterday, will provide Australian Vintage Limited with increased “flexibility in its sourcing strategy in a changing consumer environment.”
The Balranald Vineyard is currently responsible for an annual yield of 11,000-13,000 tonnes, which is about 1% of the 1.3 million tonnes produced in Australia in the 2022-2023 vintage. Its sale is reflective of the developing economic pressures that have been building as a result of the national wine glut.
While this impact has thus far been most evident in Victoria’s Riverland region – perhaps partly due to it having almost double the crush size – the impact on Riverina has been similarly notable, with Riverina Winegrape Growers reporting losses of up to $2000 per hectare on some varieties.
Australian Vintage estimates that the lease cancellation will bring in “net cash flow benefit totals [of] $12.6 million over the remaining lease term.” It will also continue to work with vineyard-owner Belvino Regional Management Services, a company backed by Hong Kong-listed group CK Life Sciences, following the sale.
“It is a testament of our strong partnership with Belvino that we were able to work through constructive options with the property, benefiting both parties,” said Australian Vintage in yesterday’s ASX post.
“AVG and Belvino have committed to redeveloping other vineyards leased by AVG, including the Qualco and Jubilee Vineyards, maximising the combined return from these important assets.”
The lease termination is expected to be effective from 26 June, the same day that Belvino is expected to sell the vineyard.
“[It] was due to expire after the 2031 vintage however the parties have agreed to end the lease early,” read Australian Vintage’s ASX announcement.
