For those of you who have not seen it, here's an interesting article on wine industry and market for "premium" wines.
If AWLT can get its corporate (and moral) act together, it could do well for itself in the coming year.
(Actually, it will have to start reporting in 7/99 or face the pink sheets. The problems alleged by some to be "scams" pulled by Papa Landi, will no longer be a possibility if the company plans to continue trading on the OTC:BB.)
****************************************************
I'LL DRINK TO THAT! - Investing in the wine industry
By Dale Oviatt
This is not your father's business anymore. Old family wineries have begun reinventing themselves as investor friendly companies. 1999 may be the year of "coming of age of the premium wine industry," predicts Bonnie K. Tonneson, an analyst at brokerage Hambrecht & Quist.
Vintners have looked ripe to investors in the past for their discounts on wine and great year-end parties. But more and more the family business is turning into just that - a business with improving end results.
Beringer (BERW:NASD), which controls 14% of the premium wine market has an extremely strong management team, left over from its short time of being owned by the Nestle Corporation. For many of today's investors their money goes to the U.S. wine business - mainly to California's Napa Valley.
The U.S. wine industry is relatively small, compared to other more traditional beverage industries such as soda and fruit drinks. Most of the wine sold in the U.S. is made by one of the following: Ernest & Julio Gallo Winery, Sutter Home Winery or Sebastiani Vineyards - all of which are still privately held. But in the smaller wine business there is a significant movement towards investor money.
Ravenswood Winery is expected to go public sometime this spring, as is
Kendall-Jackson Vineyards. A new underwriter, W.R. Hambrecht & Co. (created by Hambrecht & Quist founder and former Chief Executive William Hambrecht) is planning to offer shares online starting at $10.50.
Large container wine sales have not been impressive lately as more affluent and confident buyers are purchasing better wines. Generic wine sales fell 7% by volume last year but premium wine sales grew 12%, according to the Wine Institute of San Francisco. For premium wine producers, such as Ravenwood, this can mean growth in their bottom line.
Even though the smaller wineries trade volumes are a lot lower, Jeanne M. Kraus, senior analyst at Van Kasper & Co., a San Francisco-based investment firm, sees Chalone Wine Group (CHLN:NASD) and R.H. Phillips (PHPS:NASD) as ones to watch. Chalone has a new management team and some of the highest priced product in the industry and Phillips because it is currently very inexpensive at its present price to earnings ratio of 13X. Williamette Valley Vineyards (WVVI:NASD) has only a $7 million market cap but it is focusing on Oregon pinot noir. Many industry experts believe this compares well with its European counterparts.
What better year for the wine industry to take off than the one before a new millennium? Several of these companies also produce champagnes which many industry insiders believe is about to begin a terrific couple of years.
. . .Of course, there's always the morning after.
****************************************************
To access reports relating to this story you may wish to try the following hyperlinks:
moneycentral.msn.com
You can read this great story and more at stockgroup.com
|
