Delegat’s Ups Stake In Oyster Bay

Dan Marsteller
Posted: June 30, 2010

New Zealand’s Delegat’s Group has increased its stake in its key
global wine brand Oyster Bay to nearly 55%, following an agreement to
purchase the former 4.8% stake of investor Peter Yealands in a deal
worth NZ$0.78 million ($0.54m). The new accord ends a legal dispute
stemming from a struggle for control of Oyster Bay between Yealands
and Delegat’s in 2005. Under the settlement, Yealands must pay Oyster
Bay NZ$150,000 ($103,000) to cover costs from that dispute, and
Delegat’s will pay Yealands NZ$200,000 ($138,000), in addition to the
shares it’s buying.

Net sales for Oyster Bay—which sells over 1.7 million cases
annually—were down 3% in the six months through December. Still, it’s
posted strong growth in the U.S. of late, even as a super-premium
brand amid an economic downturn. In the year to March 2010 it expanded
by more than one-third in the U.S. market to over 200,000 cases.

“We have found that both the on- and off-premise channels have grown
significantly for us as the on-premise trade increasingly accepts
varietals other than Sauvignon Blanc from New Zealand and pricing
generally allows our wines to be sold by the glass,” Peter Edgar,
national sales manager for Oyster Bay Wines USA, recently told Impact
(Sauvignon Blanc remains Oyster Bay’s leading varietal, but the group
is also pushing its Chardonnay, Pinot Noir and Merlot varieties).

Oyster Bay’s results have been besieged by oversupply issues in New
Zealand of late—although that condition is expected to ease somewhat
this year following a lighter 2010 harvest—and will likely post a loss
for its fiscal year ending in June.

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