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Posted: Thursday, 03 September 2020 23:32

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Australia: Another Wine Society bites the dust

Sep 03: When Wine Society of India with over 10,000 members shut shop after 10 years of operation in Mumbai in 2016, there was a lot of surprise and anguish as many creditors lost money but it is even more surprising that the Wine Society, Australia’s oldest wine club has gone into administration, a step before liquidation, with money owed to several well-known wine producers, writes Subhash Arora who feels it could be due to mismanagement or due to the market penetration being too expensive

The Wine Society is Australia’s oldest wine club. It owes almost A$2 million to some of the country’s best-known names in the wine industry after slumping into administration – but payments to creditors are expected to fall short heavily, says a report in the news.com.au.

The co-op with 20,000 members has been operational since 1946. It owes money to 125 creditors including well-known winemakers like Tyrrell, Casella and Oatleys. The creditors will receive a much smaller amount back- a mere 1 to 2 cents to the dollar even though the board member of the Society had earlier assured 15 to 30 cents to the Aussie dollar, according to The Daily Telegraph.

Tyrrell alone is owed A$1.8 million. ‘Wine Industry Advisors Australasia’- the company owned by Robert Whitton- Society’s former chairman, has claimed a debt of A$400,000.

The Downfall has come after the sale of the society’s assets fell short, with its administrator agreeing to sell all its assets to the Wine Collective Holdings for less than A$1.4 million. Wine Collective Holdings has been running the co-op’s day-to-day operations since 2016.  It will have ownership of the society’s liquor licence, intellectual property and database when the agreement is completed later this month.

In December 2017, The Wine Society merged with Online Liquor Group (OLG) in a deal that was hailed at that time for creating the largest independent player in Australia’s online liquor industry. 

Wine Society of India

The case brings to mind memories of the Wine Society of India, started by Indian-born globetrotter David Banford in 2008, with Steven Spurrier investing money and becoming the Chairman. Four Seasons then owned by Vijay Mallya also invested Re.1 Crore (Rs. 10 million) in the venture. Both these investors lost money after Banford sold off his share of the Society to Direct Wines of London and left India. Prior to starting this business, he had already run successfully the Wine Society of America and even made it Public. He sold off  his shares before coming to India.

Initially, the estimates of the number of members required to break even was estimated at 3000, according to Banford. This estimate was increased to 5000 and later 10,000 with the increased governmental interference and costs going up. Even at the 12,000 members level in 2016, the project could not be viable with Direct Wines giving up and let the company simply shut shop on February 1, 2016.

For a couple of other related Articles, please visit,

Wine Society of India Launched in Delhi

The Wine Society of India comes to Delhi

Subhash Arora

 

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 Comments:

 
 

Bruce Tyrrell Says:

 

Your article states that Tyrrells lost $1.8 million to the Wine Society when it was in fact less than $50,000. We would appreciate a retraction and a reply. Bruce Tyrrell

Posted @ September 07, 2020 14:13

 
       

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