Hardys Looking Ahead

Anyone who has visited the headquarters of the Hardy Wine Company at Chateau Reynella in South Australia’s McLaren Vale will recognise the dynastic air of Australia’s largest family-owned wine company, its second largest wine exporter and third largest wine producer.

Under the dynamic leadership of Wayne Jackson, Hardy’s Wines’ Group Managing Director, this dynasty, still 90 owned by the Hardy family itself, is going places. It has recently announced the purchase of four European wine assets, bringing to a total of seven the previously foreign-owned wine companies now owned by the Hardy Group.

Simultaneously looking to export more and operate as a major European wine producer, Hardy’s have solved their marketing problems in Europe by buying distribution and cementing their influence in both it and the vital USA market. Hardy’s four most recent purchases consist of two English wholesalers which have since been merged, a hitherto run-down French winery and an historic large Italian wine producer that simply oozes potential.

Hardy’s’ overseas inclinations began early in 1989 when an internal management group suggested to the Board that the company should become more involved internationally in the United Kingdom and the United States. The group was concerned that Hardy’s establish a trading base in Europe before the Single European Market commences in 1992. Hardy’s also anticipate a possible future wine boom in eastern Europe, as wine could well become a part of a more liberal and affluent lifestyle there.

For the last twenty Hardy’s have always been amongst Australia’s top three wine exporters, and aware of limited future opportunities to expand at home without having to purchase market share, it was natural for them to look offshore. The company recognised that London is still the centre of the wine world, and that Hardy’s UK sales were not up to expectation. “There is still substantial growth potential available in the British wine marketplace for Australian wines”, says Wayne Jackson. The answer came down to distribution.

Having spent four weeks looking at over thirty different English importers/wholesalers in mid 1989, two Hardy’s directors discovered two companies of interest, Whiclar Wines Ltd, of Canterbury and Andrew Gordon Wines of Dorking. Their principals visited Australia and the purchase was settled in October, representing an investment of around $4M for Hardy’s.

Andrew Gordon Wines was the leading French wines specialist in the United Kingdom, and the joint company, Whiclar and Gordon Wines, is now one of the major importers of wine into the UK. Hardy’s now have an established, experienced and professional outfit on the ground in the UK and expect to sell five times as much of their own wine in 1990 as in 1989. The other Hardy-owned brands of Houghton and Leasingham will remain with their existing distributors.

Whiclar and Gordon will continue to import its combined range of specialised wines, with a total turnover of some $A30M. It will also seek further agency lines.

In the middle of last year Hardy’s also explored their options in France. Having discovered that prices asked were “ludicrous” in Bordeaux and Burgundy, they looked elsewhere, buying Chateau La Baume, near Beziers in the Midi area of southern France, to be renamed Domaine La Baume.

The Midi is the world’s largest wine area, growing 10 of the total world grape harvest each vintage. In comparison, all Australia accounts for a lowly 1.3! Midi’s climate is not dissimilar to the Barossa Valley’s, so the Australian team, headed by former Houghtons Chief Winemaker Peter Dawson, should feel familiar in their new surroundings.

La Baume is a disused and completely run-down Chateau/winery with 68 ha of vineyards, at which no vintage has been made for the last three years. Nobody has even lived or worked there for two years. However, the buildings have been examined by French experts, and all were found to be structurally perfect. Hardy’s are now stripping the interiors and building a modern Australian-styled winery there, costing several million dollars, as they aim to uplift the production in vineyard and winery to world standards. Premium varieties which include cabernet sauvignon, chardonnay, sauvignon blanc and shiraz are being introduced to this vast but still comparatively backward wine region in place of lesser quality local grapes.

Australian Martin Shaw and well-known Bordeaux winemaker Jacques Lurton are currently working as consultants to the building process in conjunction with Mark Tummel, Hardy’s Group Technical Director.

The winery has to be ready for the first Australian-run vintage of around 1200 tonnes in September this year, which will increase in size as markets expand. Long-term contracts with an Australian vineyard development company in France run by wine South Australian wine notorieties Robert Hesketh and Mark Swann will ensure that Hardy’s can produce a wine from chardonnay this coming vintage.

Then right out of the blue, one of the managers of Hardy’s American agents, Vintners International, mentioned a unique opportunity in Europe, which by this stage Wayne Jackson was only half-listening to.

As a property it was the complete opposite of Domaine la Baume – a grossly under-utilised Italian winery on which a recent former owner, liquor giants Seagrams had spent some $18M on top of purchase price, drastically modernising all production facilities.

So, a mere month after the French purchase, Hardy’s acquired control of Italy’s oldest family-run winery, Casa Vinicola Barone Ricasoli S.p.a., which was founded by the ancestors of its present-day President in 1141 AD.

Barone Ricasoli is a very large winery, in south-eastern Tuscany, home of Chianti, between the central northern cities of Florence and Siena. It fitted neatly into Hardy’s strategy – their new distribution company in the UK was without an Italian wine portfolio, but that country is a massive market for Italian wine.

Hardy’s also recognised a synergy between themselves and Ricasoli – in terms of distribution, their products and the extent of family involvement. Ricasoli exports to forty countries, Hardy’s to thirty. Jackson expects to develop new international markets together.

Although technically capable, Barone Ricasoli will have to improve its overall wine quality to enable Hardy’s to lift sales from their current level of 850,000 cases to the winery’s capacity of 2.5 million by the target date of 1995. Wayne Jackson believes this aspect to be his company’s most difficult challenge amongst their new foreign ventures. With Hardy’s record here, I can’t see quality being a long-term barrier for Ricasoli.

Ricasoli Tuscan Wines has excellent distribution in Europe, which Hardy’s can be expected to utilise, and are currently also the agents for Bollinger Champagne in Italy. Vintners International represent both Hardy’s and Ricasoli in the United States, so Hardy’s now expect greater leverage and influence in that market. Hardy’s will begin to import Ricasoli wines to Australia.

At the end of the day Wayne Jackson still recognises that Hardy’s’ greatest challenge is to continue to do well in the domestic Australian market. At present he intends to consolidate their expansions, and won’t admit to anything else on his planning schedule. But just on the side, I have a feeling he is keeping a close eye on anything that moves in the United States. Please login to post comment