Premium marlborough wine maker lists on NXT Market – MWE

30 June 2016

Premium marlborough wine maker lists on NXT Market – MWE

Growing demand from Chinese consumers for Marlborough Wine Estates premium wines

Auckland, New Zealand: Premium wine maker, Marlborough Wine Estates Group Limited (MWE) has become the third wine company to list on the New Zealand stock exchange and the fourth company to list on the NXT market following a compliance listing today.

The company owns vineyards in the Awatere Valley in Marlborough and produces some of the region’s finest Sauvignon Blanc under two brands – O:TU and Music Bay.

The majority of the premium O:TU wines are distributed internationally, particularly to China where MWE has strong distribution partners and the O:TU name is fast becoming a respected and recognised New Zealand brand for quality white wine. A second, more affordable wine brand, Music Bay, has also been recently launched and is for sale through selected retailers in New Zealand and abroad.

Executive Chairman of MWE, James Jia, is passionate about the quality of New Zealand Marlborough Sauvignon Blanc and sees a big opportunity to build a premium New Zealand wine brand in China.

“China is now thought to be among the top five wine-consuming countries in the world with wine imports increasing over 40% to $420 million[1] in the last year alone. Wine is seen as a status symbol among the emerging middle class in China and premium wine is becoming an affordable everyday luxury for these consumers.”

“However, the number of people who understand and enjoy white wine is still small relative to a likely market of some 100 million alcohol consumers. This presents a significant opportunity to develop and exploit the white wine market, which is forecast to grow rapidly.”

MWE already has a number of competitive advantages in China including distribution partnerships, growing brand recognition and an in-depth understanding of the market within its Chinese leadership team.

Growth for the company will come from increased production, particularly of bottled wine; expanding the wine varietal portfolio by planting new grape varietals; and building sales in China and other targeted markets including the USA, Japan and South Korea.

As well as its China distribution partnerships, MWE also has an existing distribution agreement with a Hong Kong distributor which is intended to act as a hub for further expansion into broader Asian markets. The travel market is another exciting opportunity and MWE plans to build on its existing supply relationship with China Airlines, and supply its wines to other airlines and duty free shops.

MWE is also looking to build an innovative business model where customers and distributors will have the opportunity to own a stake in the company. It is a growing belief in China that, in order to align the distributor’s interests with shareholders of the producer, contractual sales and marketing arrangements should be linked with equity incentives. MWE believes this alignment will further entrench these partners’ loyalty and drive sales growth.

MWE is already profitable, with bottled wine sales expected to grow to $3.4 million by the end of the 2017 financial year under its key operating milestone target. With ownership of approximately 336 hectares of land, including 157 hectares of producing vines, MWE has the ability to increase production without the need for significant capital expenditure on further land acquisitions.

Mr Jia says the Board is committed to building MWE into a premium provider of artisan wines and, as executive chairman, his main focus is on developing and building the MWE wine brands in China.

“Becoming a listed company is an exciting next step in the development of MWE. The strong governance framework, transparency requirements and public company disciplines are also seen as being a very important part of building trust and credibility in the Chinese market. We believe that our company will provide an opportunity for prospective investors to be part of a successful New Zealand domiciled but internationally focused wine company.”

ENDS

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