Dromana Estate chases China sales

MORNINGTON Peninsula winery Dromana Estate will seek to raise up to $306,250 to accelerate its bottling of bulk wine now in storage and to support sales and marketing initiatives in China.

China is developing a taste for the grape and is now the No. 5 export market for Australian wine. While many key Australian markets such as Britain and North America experienced a slip in sales volumes and value as the financial crisis took hold, sales to China are rising dramatically, up 90.8 per cent to 23.28 million litres in May, according to the Australian Wine and Brandy Corporation.

Dromana Estate has appointed a business development manager for the China market and has begun testing it with its range of shiraz and other red blends. It has brought forward its bottling plans to complement a renewed marketing campaign for the Australian market.

The publicly listed Dromana will offer 15.3 million shares at 2¢ each, on the basis of a renounceable pro rata entitlement issue of one new share for every four shares held by shareholders as at June 23.

Dromana Estate managing director Geoff Bell said the funds would help to bottle its wine, sold under the Dromana Estate and David Traeger labels.

"In the past couple of years, our sales have really been trending down, and my focus is to really get everything in bottles and have an aggressive sales campaign, both locally and overseas," he said.

He said the company had orders for the wine that was about to be bottled.

The company's sales declined by 10 per cent in the first half of 2008-09 as revenue fell to $908,452 , and it reported a loss for the period of $447,896. Shares in Dromana Estate last traded at 1.5¢.

Mr Bell said the company had delivered samples to key distributors in China. "The feedback has been very good on the quality. The real issue is supplying wine at the right price. China's price point is low compared to our expectations, currently around $100 a case or $8 a bottle.

"I think over time they will move to a more premium wine - better quality and higher price."

The Australian Wine and Brandy Corporation's regional manager, Ali Hogarth,said China was No. 5 by volume and No. 4 by value for Australian wine.

She said the challenge for Australian wine companies in China was the limited number of local distributors, proper storage and transportation facilities, and appealing to local tastes.