Wei Long Grape Wine Company, which recently purchased three vineyards in Australia and is building a $80m winery in Mildura, is suffering “financial stress.”
China’s third largest winemaker has announced it is axing a major organic wine project in China.
Wei Long released a statement saying: “The company to save costs and improve marketing efficiency, decided not to implement the project.”
It added that increased competition from imported wines and a series of natural disasters had driven it to “make sales strategy adjustments based on overall market and environment conditions”.
the drinks business notes: “The decision might also be linked to the company’s financial stress. In September last year, the winery announced its ambitious plan to invest AU$80 million in building an Australian winery in Victoria when it was already having trouble raising outside investment for its organic wine project, a Chinese news website Yun Jiu Tou Tiao wrote.
“Setting up the organic project alone would cost the company about 120 million RMB (US$17.5 million), according to a story by Sina news when Wei Long was preparing for IPO in 2015.
“The company’s overall wine sales have been plummeting since 2011 as well, dropping from 836 million RMB (US$120.8 million) in 2011 to 35.4 million RMB (US$5.1 million) in 2013.
“In another sign of the company’s strained finances, it is also pulling out of building a nationwide distribution network citing high costs of managing stores, warehouse etc as main reasons.”
Australian viticulturist Bruno Zappia spent more than five years helping Wei Long establish what it claims is the world’s largest organic vineyard, in China’s Gansu Province. The new project was expected to increase its production to 40,000 tonnes a year.
Zappia is now Wei Long’s general manager of Australian operations.
Wei Long’s proposal to build a facility in Mildura with an annual crush of 84,000 tonnes ran into trouble last year when fellow Sunraysia winery Zilzie Wines lodged an objection.
Zilzie was concerned about the impact increased traffic would have on local roads and how the development would affect water and power supply to other properties, however ABC Rural reported last month that it has decided not to take the objection any further.
Wei Long said in its recent statement that its Australian wineries “can guarantee the grape supplies for all wine production” following its decision not to continue with its organic wine project in China.
The company revealed in October that all wine produced at the Red Cliffs facility will be exported to China by Weilong Grape Wine Company under the Grand Dragon label.
