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Aussie Wine Company Faces Angry Creditors

Grateful Palate's R Wines is in receivership; grapegrowers fear they won't get paid

Harvey Steiman, Tyson Stelzer
Posted: July 1, 2010

Trouble is brewing in Australia. The Grateful Palate's Australian affiliates, which produce wine under labels such as Bitch Grenache, Evil Cabernet Sauvignon and Marquis Philips for American importer Dan Philips, are in receivership and face the danger of possible bankruptcy. Growers and other creditors for the South Australia-based affiliates of the company received notice on June 18. Many growers, already facing tough times, worry that they'll never get paid for fruit they sold Philips.

Philips, the company's founder and owner, confirmed that he is in negotiations with his top creditor, Dutch lender Rabobank, but declined further comment. The bank initiated the action to put Grateful Palate International Pty Ltd and several related Australian companies into receivership. The most prominent is R Wines, a partnership with winemaker Chris Ringland, but 3 Rings, a joint venture involving Philips, Ringland and grower David Hickinbotham, is also part of it.

Philips built his wine operation by partnering with Australian growers and wineries to produce popularly priced wines with clever, colorful labels for his import business. Several of the wines enjoyed notable success in America. The wines are made and blended under Ringland's supervision to match the marketing idea. They include Boarding Pass and First Class, Darby & Joan, Strong Arms, Punk Bubbles and Bon-Bon Rosé.

Growers tell Wine Spectator they have filed claims with the receiver, PricewaterhouseCoopers, for grapes delivered to R Wines in 2009 and/or 2010, alleging that they have not been paid in full. Adrian Hoffman, a veteran Barossa-based vineyard owner and the liaison between R Wines and 25 members of the Valley Growers Cooperative (VGC), said that Philips' company owes them A$750,000 (US$628,000). Other growers have filed similar claims, Hoffman said.

"They notified us prior to delivery in 2009 that they would pay 50 percent on July 31, another 25 percent in September and 25 percent in December, but when the first payment didn't come through we were concerned," said Hoffman. "We have been paid 25 percent of the bill, but it doesn't look like any more will be forthcoming. Personally I'm owed quite a lot but I'm most concerned for our growers. It's quite a mess."

Hoffman is also owed money for 2010 fruit supplied to R Wines, though he admits that the company purchased very little this year. "It's not just a matter of being paid for last year's fruit but of finding a home for the fruit this year," he said. "We're in massive oversupply at the moment and we've been processing the 2010 vintage into bulk wine in the hope that R Wines might be able to purchase it."

It is unclear why Rabobank decided to take action at this time. The grower contracts involved represent a fraction of Philips' total debt. It's unclear how much money Philips owes other creditors, including Rabobank. Neither the bank nor PricewaterhouseCoopers have returned phone calls. "Rabobank is acting in its best interests," Hoffman said, "but it looks like the growers are going to be caught in the crossfire." Some growers worry any money made on Grateful Palate's assets in case of bankruptcy will go straight to Rabobank, leaving them high and dry.

Hickinbotham's McLaren Vale vineyard, which supplies grapes to Clarendon Hills, is not involved in the receivership. Neither is his Riverlands property, from which he makes the popularly priced Paringa wines. Hickinbotham said that he is ready to buy 3 Rings from the receiver.

For his part, Hoffman said he is considering a claim on R Wines and the vats of wine that remain unbottled and unsold. "That would be better than what the administrator can do," he said. "I would like to keep the joint venture going. It has some real merit. There are some very good winemakers involved."

Ringland was en route home to Australia from the United States at press time. As a partner in R Wines and 3 Rings, he is on the hook along with Philips as this plays out. But these are not his only wine ventures. He has his own winery, Chris Ringland Shiraz, his own vineyards in Barossa and a winery in Spain, none of which are involved. "They are secure," he said in an email. "In addition, my work in Spain acts as a very useful buffer for these misfortunes."

Grateful Palate Imports, a separate company based in Fairfield, Calif., is not directly involved in these proceedings. It is also owned by Philips, and imports some 30 different wineries. Aside from Ringland, the list includes Burge Family, Greenock Creek, Hazyblur, Majella, Noon and Trevor Jones.

Daniel Posner
New York —  July 1, 2010 5:37pm ET
I am glad this is getting some coverage. Many farmers and wineries down there are in very bad shape because of this mess. I am glad that "Spain acts as a very useful buffer" for Chris Ringland, though. At least, he gets to move on.
Kctucker
Escondido, CA —  July 1, 2010 5:53pm ET
...And the overhyped wines of Australia come crashing down.
Chris A Elerick
Orlando, FL —  July 2, 2010 10:06am ET
bummer. i've enjoyed some of the grateful palate's offerings (particularly the southern belle shiraz aged in used bourbon barrels). sounds like the perfect storm for someone who had a pretty good idea but took the plunge in the wrong place at the wrong time.
Mike Adams
Smithfield, VA —  July 3, 2010 10:48am ET
So sad for all involved.
Dave Joyce
Winston-Salem, NC —  July 3, 2010 11:25am ET
Harvey,
The really sad part is like Hoffman is quote as saying, the joint venture "has merit". Dan Philips is the only Aussie importer I know that saw the rapid change in the price points for the market for Aussie wine, and took action to fill a need in the "new market". These are all very consistent, very good wines, even at the lowest end of the line. With 90% of the portfolio selling under $25, it is perfect for todays market, at least my customers think so. They got caught in a perfect storm of the economy, distributors not wanting to stock anything, especially Aussie wines where they were sitting on tons of other brands not moving quickly, and many retailers just washing their hands of the whole Aussie market. Not to mention some of the extremely biased comments on Aussie wines, that Philips and Sparky Marquis have been the most frequent targets of, floating around in the blogasphere. Hopefully that banks will allow time for them to move the wines in storage and for their market plan to see completion as these wines, the this plan, deserve it.
Ronnie Sanders
Philly —  July 7, 2010 8:55am ET
Hey Dave,

You need to know some other Aussie importers. Inexpensive well made, juicy wines have been Australia's calling card for the last twenty years. I can think of a number of really good quaslity wine at great price points from other importers. Of the top of my head, wines like D'arenberg's Stump Jump come to mind. I would guess that Chester has about 12-15 vintages under his belt of that wine. There are wines like Woop Woop and Black Choock from Epicurean, Wishing Tree and Hill of Content from John Larchet at Australian Premium wines, anything from Yalumba who just keeps kicking goals under $20, Penfolds 389 is a great wine for the price. Tait Ball Buster from Southern Starz. I can go on and on.

Don Rauba
Schaumburg, IL —  July 16, 2010 6:57pm ET
See, there you go. "People" are too eager to lump all Australian wine into one bucket. D'Arenberg makes NO wine to satisfy my new world palate. R Wines makes MOST of its wine to satisfy my palate, and therefore, I buy it as often and in as great of volume as I can (not only for the wine, but also because I don't have to be concerned with cork taint, god bless 'em). R wines DOES have old world bottlings which are also excellent. But where are the WS reviews of most of their portfolio? Non-existent. As I read these posts, I blame their problem on marketing. No one should market these wines to the old world crowd; that would make zero sense. But they do need marketing (other than the labels, where is it?) and they are anything but overhyped (kctucker)... right now here in Chicagoland there seems to be a huge surge in popularity of Southern Belle Shiraz, selling briskly everywhere I know of... imagine if the other wines were actually tasted out, what that could mean in terms of moving inventory. But just try to get an "R Wine" on one of your store's tastings. Won't happen. That's the problem.
Allen Clark
Arlington, VA —  August 26, 2010 1:19pm ET
There are many wines in the Grateful Palate portfolio that are excellent, some are also great values. The company clearly has financial problems, but it's not because the wines are bad. If the company goes under, for whatever reason, there are any number of importers that would fill the void and bring those wines to our shores. From a consumer perspective, there's no reason to worry about this issue.
Joseph Byrne
Gardiner NY —  August 28, 2010 12:04am ET
Dude (Chris) you should have seen these one coming from a mile away with the Marquis Philips craziness.

Will still follow your wines wherever they are.

Clio Rules!

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