Press release + Q&A — Foster’s and Kilikanoon agree Seppeltsfield sale

Dear readers,

Foster’s has just announced the sale of the historic Barossa property, Seppeltsfield, home of one of the world’s great fortified wine cellars to a group of investors led by Kilikanoon Wines.

Reproduced below is Foster’s press release and a question and answer sheet issued by Nathan Waks, Managing Director of Kilikanoon Wines.

Foster’s press release:

27 August 2007

FOSTER’S AND KILIKANOON AGREE SEPPELTSFIELD SALE

Foster’s Group Limited (Foster’s) and Kilikanoon today agreed the sale of the Seppeltsfield site in South Australia’s Barossa Valley.

The sale includes the historic Seppeltsfield site, winery, vineyards and visitor facilities, the rights to the Para, Trafford, Old Trafford, Solero and Mt Rufus fortified wine brands and the majority of Seppelt fortified wine stock currently on site. Foster’s has granted Kilikanoon an exclusive license for the Seppeltsfield brand.

“The Seppeltsfield site is truly unique in the wine world, said Foster’s Chief Executive Officer, Trevor O’Hoy.“ Under Kilikanoon’s stewardship, this site will continue as one of the world’s great names in fortified wine and retain its place as a great South Australian tourism landmark.”

“Seppeltsfield houses the world’s greatest collection of fortified wines dating back to 1878 in an unbroken tradition. We are proud to become the next custodians of this priceless national treasure”, said Kilikanoon CEO, Nathan Waks. “We will work hard to ensure that Australia’s already fine reputation in this area is enhanced and to rejuvenate the Seppeltsfield Village over time through sympathetic wine-related redevelopment”

Foster’s retains the rights to the Seppelt brand for table and sparkling wine, which will continue be based at the Seppelt Great Western winery, purchased by Benno Seppelt in 1918. “

“We are committed to growing Seppelt and its reputation for Australia’s most awarded sparkling and regional wines, Mr O’Hoy said. “We are confident that under the Seppeltsfield name, a new and successful chapter in Australian fortified wine has begun.”

Under the sale agreement, Foster’s and Kilikanoon have entered long term lease and supply contracts over around 100 hectares of premium Shiraz and Grenache vines. In addition, Foster’s will continue to manage maturation stores and Kilikanoon will process grapes for both fortified and table wines for Foster’s at the site.

“Foster’s is to be congratulated for having the respect for tradition embodied by Seppeltsfield, as well as patience in the sale process to ensure that a suitable party was found to maintain, and further develop, that tradition”, said Kilikanoon Chairman, Bruce Baudinet. “We look forward to a close ongoing working relationship”

The transaction is due to be completed over coming months. Details of the sale agreement are confidential but not considered material to Foster’s.

Seppeltsfield (Barossa Valley)
The Seppeltsfield property was purchased by Joseph Seppelt in 1851 and is today dedicated to the production of premium fortified wines. Its blue stone cellars hold around 9 million litres of fortified wines including stocks of the now famous 100 year old Para Liqueur Vintage Tawny. The 185 hectare property includes the National Trust listed historic homestead and approximately 100 hectares of surrounding vineyards.

Kilikanoon
Kilikanoon is a premium boutique Australian wine maker based in South Australia’s Clare Valley. Rated as 5 stars by James Halliday’s Australian Wine Companion and considered as “one of Australia’s best-run wineries” by Robert Parker, Kilikanoon was founded by winemaker Kevin Mitchell in 1997. Kilikanoon now exports to 25 countries. Its flagship wines such as “Oracle” Shiraz have had considerable success in major international and Australian competitions.

Details of Transaction
The sale includes the Seppeltsfield winery, Cellar Door, approximately 100 hectares of surrounding vineyards, the majority of Seppelt fortified wine stocks currently on site, fortified brands names including Para, Solero, Trafford, Old Trafford, Mt Rufus and an exclusive license for the Seppeltsfield brand for fortified wine.

Foster’s will continue to retain ownership of key fortified wine stocks on site which will form the basis of Foster’s fortified wines portfolio moving forward. Wines such as Penfolds Great Grandfather and Grandfather will continue to be managed and matured at Seppeltsfield, marketed and sold by Foster’s.

Foster’s will also lease-back the Seppeltsfield vineyard and process the majority of fruit ensuring ongoing access to high grade Shiraz and Grenache varietals. The sale will be finalised in coming months, and at that time, the existing Foster’s Seppeltsfield Cellar Door will cease operations.

KILIKANOON QUESTION AND ANSWER

Seppeltsfield Q and A

Q. What is being sold?
A.  The sale includes the following:

  • The Seppeltsfield historic site with its magnificent suite of heritage-listed buildings dating back to the 1850s
  • The complete range of fortified brands and attendant stock currently sold under the Seppelt brand, including the unique Centenary Collection of Para Liqueur Tawny (Port), in an unbroken tradition dating back to 1878 when Benno Seppelt first decided to lay down a puncheon of his finest tawny port, to be left to mature for 100 years…
  • Two wineries on the site- a modern 12,000 tonne capacity winery and the revolutionary 1880s gravity-fed winery designed by Benno Seppelt, both of which we hope to make fully operational for the 2008 vintage
  • Approximately 100 hectares of prime vineyard in the heart of the Barossa Valley, planted to (old bush-vine) Grenache, Cabernet, Touriga, Palomino and including several Icon Shiraz blocks (Icon blocks are destined for the highest range of table wines made by the Foster’s Group such as Grange and RWT)

Q.  Who are the buyers?
A.  The Seppeltsfield Estate Trust will buy the assets. The owners of the Trust include Kilikanoon Wines, Janet Holmes aCourt, Greg Paramor and Kilikanoon’s major shareholders Nathan Waks and Bruce Baudinet.

Q What is their vision?
A. To revive the Seppeltsfield Village, based around the unique and irreplaceable fortified wine collection. Over time this will include sympathetic redevelopment and adaptive re-use of many of the Heritage Buildings in line with the Seppelt family’s original wide-ranging food and beverage interests.  The well- known  musical careers of Kilikanoon partners, violinist John Harding and cellist Nathan Waks will ensure that the arts take centre stage in the future with a Seppeltsfield Festival high on the agenda.

Q. What happens to the Seppelts Brand?
A. Foster’s will continue to own and develop the Seppelts brand, based in Victoria with its great range of still and sparkling table wines, whilst licensing the name Seppeltsfield exclusively to the new owners for the continuing production of the fortified wine collection.

Q. What happens to winemaker James Godfrey?
A. James will continue to make the fortified wines on site for both Seppeltsfield and Foster’s to ensure that the tradition and quality of the wines are maintained. The Seppeltsfield Trust will employ apprentice and junior winemakers to learn the specialist art of fortified winemaking from one of the world’s finest exponents.

Q. What about the Foster’s wines currently stored on site?
A. Foster’s and the new owners are committed to working cooperatively on many levels including the storage and maintenance of the ancient Solera barrel systems. Their joint aim is to make Seppeltsfield a world centre of excellence in fortified wine production. This will include the Seppeltsfield winery processing and maturing a significant proportion of the Foster’s group’s fortified wines.

Q What happens to the Icon Shiraz?
A. Foster’s will lease back and manage the entire vineyard, with Seppeltsfield acquiring a limited amount of fruit, mainly for the fortified range.

Quotes

Bruce Baudinet; Chairman (and partner) of the Kilikanoon group
“ Foster’s is to be congratulated for having the respect for tradition as embodied by Seppeltsfield as well as patience in the sale process to ensure that a suitable party was found to maintain and further develop that
tradition. ”

Nathan Waks; CEO (and partner) of the group
“Seppeltsfield houses the world’s greatest collection of fortified wines dating back to 1878. We are proud to become the next custodians of this priceless national treasure and will work hard to ensure that Australia’s already fine reputation in this area is enhanced”

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