McWilliam’s Wines, one of Australia’s oldest wine brands, called in administrators KPMG on 8 January.
David Pitt, chief executive of the 143-year-old family company, said the business had relied too much on its long history of making lower-end commercial wines sold below $10 (£5.25), where profit margins were razor thin.
McWilliam’s then missed the trend towards premiumisation and a new generation of drinkers willing to spend more on higher-quality wine.
Six generations of the family have grown grapes in the Riverina wine region of New South Wales since their descendant, Northern Irishman Samuel McWilliam, planted the first vines in the state in 1877.
In 1941 McWilliam’s acquired the famous Hunter Valley wine label Mount Pleasant, founded by Australian winegrowing legend Maurice O’Shea and known for its Shiraz and Semillon wines.
Mt Pleasant’s Lovedale Semillon and two vintages of the Elizabeth Semillon have Regional Trophies at the Decanter World Wine Awards, as has McWilliam’s Syrah 2013, while the 2008 McWilliam’s 1877 red blend has won a DWWA International Trophy.
In addition to selling its own wines, McWilliam’s is the Australian distributor for global brands including Taittinger, Mateus, Henkell and Mionetto.
The decision to enter voluntary administration had not been taken lightly, said McWilliam’s former chief winemaker and current company chairman Jim Brayne.
‘A number of factors contributed to a decline in business performance,’ he said, ‘including evolving structural market dynamics and capital constraints.’
KPMG restructuring partner Gayle Dickerson said in a statement: ‘The company will continue to operate as normal, and we are working with the McWilliam’s family with the support of its employees while we work hard to try to preserve one of Australia’s oldest winemakers.’
‘We are seeking expressions of interest to recapitalise or acquire the group to take this heritage brand forward in the future both locally and globally.’
A meeting with creditors and key stakeholders is planned for 20 January.
It was reported in January 2019 that McWilliam’s suffered a 13% fall in revenue for the 2017-2018 financial year, achieving AU$87.4 million.
Soon after, the board announced a AU$16 million capital injection from Western Australian businessman Peter Fogarty and agricultural fund manager Laguna Bay.
Mr Fogarty is the owner of Lake’s Folly in the Hunter Valley as well as Millbrook and Deep Woods wineries in Margaret River.
The news of McWilliam’s voluntary administration comes at a terrible time in Australia, as persistent drought and fierce bushfires continue to ravage the country.
Additional reporting by Tina Gellie.