How do you make a small fortune in wine? “Start with a large one!”
Many a true word is spoken in jest. But there are plenty of examples — one in the form of a listed company, Winecorp (back in the 1990s) — of ambitions withering on the vine when steep initial investments simply don’t justify the erratic and often low returns from wine investments.
The old KWV, veteran readers will remember, battled for profitable traction in its wine segment, while Distell — now part of brewing giant Heineken — leant heavily on its 4th Street plonk while some of its top-end brands such as Alto and Plaisir de Merle were sold off.
It might surprise then that Euronext-listed French wine conglomerate AdVini appears to be making well-fortified returns from its handful of South African wine farms — which include L’Avenir, Le Bonheur, Ken Forrester Wines, Kleine Zalze and Stellenbosch Vineyards.
According to the latest financial report from AdVini, the South African operations managed a sprightly 13.2% of the group’s €273m turnover in financial 2024. The FM understands the profit contribution was even sturdier.
While five wine estates might not — at face value — appear to have the critical mass demanded by a large liquor corporation, it seems that capitalising on AdVini’s route to market, financial muscle and market expertise could make a world of difference when it comes to squeezing out acceptable returns.
Interestingly, AdVini made its first South African acquisition (L’Avenir) in 2010 and staggered the others over the ensuing years, with Kleine Zalze the last purchase in 2022. Considering the South African portfolio’s outperformance, don’t be too surprised if AdVini puts down another local marker … or three.
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