Oyster Bay and Delegat's yet to agree on grape prices

Monday 1st February 2010

Oyster Bay Marlborough Vineyards, which grows the grapes for wines made by Delegat’s , missed the due date to agree a price for its 2010 harvest, as it has for at least the past three years.

Delegat’s owns 50.1% of Oyster Bay, making it a related party, and reaching agreement on the grape price by January 31 is a condition of their arrangements, enforced by NZX regulation. Oyster Bay admitted to what amounted to a technical breach of the rule relating to the 2005 harvest.

In reality, Oyster Bay prefers to wait until it has more of a sense of how prices are being set in the Marlborough region than can be gleaned by January 31 before agreeing to a price, said chairman Sandy Maier.

“It’s beneficial for us to have as much data as we can,” he told BusinessWire. “We know who it (the grapes) is going to so the only question is price.”

Prices for grapes are expected to be down this year, because of a supply-demand imbalance that’s likely to take several years to work through, Maier said. It may take another two months to determine the price for 2010 and “we’re comforted by having a strong buyer,” he said.

Delegat’s posted a 57% jump in profit last year, as demand for its Oyster Bay brand wines surged, defying the global recession. The winemaker had global sales of 1.7 million cases in the latest year, up 20% from 2008.

Shares of Delegat’s rose 1.5% to $2.75 today. Oyster Bay was unchanged at $2.10.

Businesswire.co.nz

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