Anyone got any news on why MGW has run so hard today?
Volume seems average so unlikely to be takeover activity.
The following article appeared in The West Australian this morning ... might be taken as a potential turn-around signal for the industry;
White grape prices soar on hot demand 27th November 2006, 6:45 WST
Margaret River grape growers are enjoying a 30 per cent spike in prices for fashionable white varieties as east coast drought conditions force winemakers to look west to find fruit.
Grape growers in the winemaking region in the South-West report sauvignon blanc and semillon grapes are selling for as much as $2000 a tonne, up by as much as $500 from the same time last year.
The price increases are good news for growers but the sector is cautious about talking up conditions, for fear it will spark a fresh round of planting and a potential new over-supply.
Drought and damaging frosts on the east coast are expected to reduce yields from the 2007 vintage and potentially soak up some of the damaging grape glut but the WA industry still faces significant challenges, including the rapid growth of cleanskin sales and aggressive discounting among the major retailers.
Fraser Gallop Estate winemaker Clive Otto said prices for the two popular white grape varieties had increased by at least $200 a tonne as demand for the fashionable whites outstripped supply.
Formerly the Vasse Felix winemaker, Mr Otto said New Zealand’s successful marketing campaign for sauvignon blanc was partly to blame for the increased demand for the fruit.
“A lot of people are now drinking sauvignon blanc rather than chardonnay — it just represents an overall marketing shift,” Mr Otto said.
This relatively rapid shift from chardonnay to sauvignon blanc has caught many winemakers short as they wait for recently planted vines to mature. Like many vineyards in the region, Fraser Gallop focused on cabernet and chardonnay but it has planted new white vines and plans to produce a semillion-sauvignon blanc next vintage.
“A lot of people planted reds back in the late 90s not really paying attention to whites, if you were a prudent investor you would have put in 50:50 but a lot of people went 60:40 (favouring reds) and that is why there is an imbalance,” Mr Otto said.
WA wine group Australian Wine Holdings was this year forced to sell its major wineries — Hay Shed Hill and Alexandra Bridge — to clear debt and trade through the grape glut.
AWH founder Mike Calneggia said the spot price for Margaret River sauvignon blanc was running at between $1800 and $2000 a tonne but the price increase would only benefit growers who had fruit in excess of any existing sales contracts.
“There was already a bit of an issue with supply of those varieties but what has largely happened is that there is a bit of a lull at the moment because a lot of people have replanted those varieties,” Mr Calneggia said.
Sales of WA’s sauvignon blanc and sauvignon blanc-semillon blends grew by almost 24 per cent in the 12 months to the end of September, according to ACNielsen.
Australia wide, sauvignon blanc sales increased more than 37 per cent. ACNielsen associate director Vaughan Ryan said he was in regular contact with Coles and Woolworths and their key message for the wine sector was — produce more sauvignon blanc.
CATIE LOW
MGW Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
