Strategy vital for wine co-ops

Winegrowers eyeing up a co-operative wine company being set up in Marlborough should take a close look at its business plan, says Rabobank senior analyst Marc Soccio.

Mr Soccio, from Sydney, told delegates at the Romeo Bragato wine conference in Blenheim yesterday that growers were a fragmented part of the supply chain and often turned to co-operatives to have more say and capture more value.

He said later that grower co-operatives frequently failed because they were under-capitalised and under-sold, but they could do well with the right investment and management.

Marlborough grape growers Ross Flowerday and Kevin Kilpatrick revealed on Tuesday they are on a steering committee of five appointed to develop the concept of a grower-owned wine company built on an existing wine business in the region. They would not name the business, but said it was set up by a group of growers more than 10 years ago. The aim was to return profitability, business sustainability and vine management to growers, the said.

Mr Soccio said yesterday growers interested in joining the co-operative should look for strong strategy and a good business plan.

"To do something like this well costs a lot. You can't be half-hearted," he said.

The time was right to launch a wine co-operative because short supply meant there was a good chance of getting their own brand on to the market and attracting buy-in.

On the downside, it might be hard to attract growers because they should not have any trouble selling their grapes next season.

By banding together, small growers could sell to supply chains like private labels owned by retailers, he said.

Members might also be able to buy services such as vineyard consultancy, which they could not afford alone.

Australian grower co-operative CCW was producing 10 to 15 per cent of the national crush, he told delegates. After launching its Growers Gate label on the international market, the co-operative had a better understanding of the difficulties traditional wineries faced in a declining market.

Three out of five top wine producers in Italy were co-operatives, Mr Soccio said. This accounted for about 40 per cent of wines and 25 per cent of growers including owners of vineyards smaller than 2 hectares.