Saviours circle vineyard project

Several potential investors have reportedly expressed interest in buying the Karri Oak vineyard investment scheme since it was put into administration last month.

Several potential investors have reportedly expressed interest in buying the Karri Oak vineyard investment scheme since it was put into administration last month.

Respected viticulturist Ted Avery, who is a consultant to the Karri Oak scheme, told Money Management that he understood several parties were looking at the project.

It is also understood Arthur Baker, a director of Sandgate Corporation, the lessor of the land at Karri Oak, is trying to refinance the company to take back control of the investment.

Avery is also a consultant to the nearby Frankland Valley Vineyard which Money Management understands is being tipped as a perspective purchaser.

The administrator, Bryan Hughes of Perth accountants Norgard Clohessy, was not returning phone calls on the matter.

In a separate announcement, the Australian Securities and Investment Commission has warned investors of an upcoming glut of grapes which would make some vineyard investment schemes uneconomic. The boom in vineyard investments is producing predictions that grape supply will soon exceed demand, with a resulting fall in prices.

ASIC regional commissioner Greg Tanzer says those schemes that forecast high return on prices, and which are then hit by a fall in demand, are not good indicators of future returns.

“We issued a warning last year to investors that current fads can turn good prices into a market glut, making the original venture unprofitable,” he says. “Less that 18 months later this situation is becoming a reality.

“Investors must make sure a vineyard has an established forward contract that can absorb the changes in supply and demand, because if the vineyard can’t sell its grapes, investors won’t get a good return.”

Vineyard investors are also carefully watching the expansion in plantings by the big producers, such as Southcorp and Fosters, and seeing how this will effect the demand for grapes from outside producers.