February 6, 2024

Lynda Kiernan-Stone, Global AgInvesting Media

After six years being owned by The Carlyle Group, Accolade Wines, a global premium wine and spirits company and the second largest wine company in Australia, announced it has agreed to a recapitalization plan that will result in a change of control of the company. 

Under the terms of the plan, which is expected to be finalized in mid-2024, Australian Wine Holdco Limited (AWL), a Bain Capital-led consortium of existing Accolade institutional investors including Intermediate Capital Group, Capital Four, Sona Asset Management, and Samuel Terry Asset Management, will take equity ownership of Accolade from existing shareholders. 

The Carlyle Group originally acquired Accolade in early 2018 from CHAMP Private Equity for A$1 billion (US$772 million). 

At the time, the outlook for the Australian wine industry was brighter. In 2015 researchers at Adelaide University and Victoria University stated that Asian markets, led by China, would grow to dominate world wine consumption within the next three years creating significant shifts in global trade flows.

“It is the sheer size of China’s adult population, and the fact that grape wine still accounts for less than 4 percent of Chinese alcohol consumption, that makes the import growth opportunity unprecedented,” University of Adelaide’s Kym Anderson said at the time.

When it acquired Accolade, Carlyle stated it expected to build out the company’s strategy in regard to the Asian market, and particularly China.

However, by late 2020 China was embroiled in a conflict with the Australian government over the global pandemic and human rights violations, imposing tariffs on wine ranging from 107.1 – 212.1 percent, depending on the company, increasing them to 116.2 – 218.4 percent by March 2021. These actions hit Australia’s wine industry hard, lowering the value of the country’s wine exports by A$2.08 billion over the year ending June 30, 2022. 

More recently, relations seem to be thawing between the two countries, with China’s commerce ministry announcing in late 2023 that it would be undertaking a review of its tariffs on Australian wine, but by then Accolade was already facing restructuring. 

“This agreement is great news for Accolade, our customers, our suppliers, and our people,” said Robert Foye, CEO, Accolade Wines. “Like all Australian winemakers, we have been hit by a number of challenging macroeconomic and industry headwinds in recent years.”

Accolade stated that this plan is expected to result in a significant reduction in the company’s total senior interest-bearing debt, and a reduction in annual interest expense. This, together with additional funding from each of the AWL partner investors, should provide the operational flexibility needed for the growth of the business. 

“Despite our strong stable of brands and leadership positions in key markets, as well as operational measures taken to strengthen the business, our ability to respond to these challenges and grow has been hampered by an unsustainable balance sheet,” said Foye.

“With this recapitalisation and the support of our new shareholders, we will be ideally positioned to take advantage of the significant opportunities to meet customer demand and grow sales around the world.”

From its beginnings in 1836, Accolade has grown to have operations on each of the world’s continents and a collection of more than 50 wine brands, including Hardy’s, Banrock Station, and St. Hallett. Sourcing wine grapes from both the new-world and old-world regions, the company sells its wines to 130 countries.

“Accolade Wines has a long, proud Australian history as a world class wine producer and we hope it will remain so for many decades to come,” said a spokesperson for AWL. We hope this restructure will build a more secure long-term future of the business.”

“We will be working with and supporting Accolade’s management to focus on operations and stakeholders. We recognise Accolade’s South Australian operations will be crucial to the success of the company and understand the important role the company plays in the local grape growing industry, and the broader South Australian economy. We are committed to working with Accolade’s business partners of growers and customers to ensure a sustainable business.”

~ Lynda Kiernan-Stone is editor in chief with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, as well as HighQuest Group’s Unconventional Ag. She can be reached at lkiernan-stone@globalaginvesting.com.

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