Merger Creates Australia's Fifth-Largest Exporter

Susan Gough Henly
Posted: May 12, 1999

In a deal valued at about $48 million (U.S.), two Australian wine companies -- best known for wines that sell for $7 to $10 in the United States -- have merged to form a million-case enterprise, ranking as Australia's seventh-largest publicly held wine producer.

The union of Cranswick Estate and Australian Premium Wines -- which will be called Cranswick Premium Wines Ltd. as of July 1 -- also creates the fifth-largest exporter of Australian wines. With the merger comes a significant shift in strategy. "The United States is the number-one target market for expansion," said Graham Cranswick-Smith, managing director of Cranswick and CEO of the newly merged companies. Up until now, Cranswick had focused predominantly on the United Kingdom, while Japan, Germany, and Canada have been APW's biggest export markets.

Leading the new group's growth is chairman Ian Mackley, who as former chief executive of Penfolds Wine Group oversaw a series of winery acquisitions that made the firm into Australia's largest wine company, now called Southcorp Wines. Both Cranswick Estate and APW went public in late 1997, and their merger will give them greater economies of scale by building on the supply and manufacturing strengths of APW and Cranswick's track record in marketing and distribution.

APW, which owns about 425 acres of vineyards in South Australia and Victoria, is most widely recognized in the United States for its Milburn Park and Salisbury brands and, to a lesser extent, the premium Haselgrove wines. "Haselgrove was a major part of what attracted us to APW," said Cranswick-Smith, who is in negotiations over U.S. distribution opportunities for the McLaren Vale-based winery. The company is also constructing a new state-of-the-art facility at Haselgrove, which is renowned for its Shiraz.

Cranswick, which is based at the 667-acre Cocoparra Vineyards in the Riverina district of New South Wales, has been particularly successful in developing strong brands in export markets. Its Barramundi line of varietal wines has become one of the leading Australian brands in the United Kingdom. In the U.S. market, the company is best known for its midpriced Cranswick Estate wines and Cedar Creek magnums.

To learn more about Australian wines:

March 31, 1999
Annual Report On Australia

March 31, 1999
Australian Treasure Hunt

June 30, 1998
The More the Merrier

June 30, 1997
Australia's Cachet

October 15, 1996
Small Aussie Vintners Forced to Sell Wineries