Oyster Bay owner Delegat to raise prices in UK, citing Brexit vote

Tuesday 6th December 2016

Delegat Group, the owner of Oyster Bay wine, has warned it will have to increase prices in the UK due to the sustained weakness of the pound following the vote for Britain to leave the European Union.

Oyster Bay sauvignon blanc, chardonnay and merlot are the best selling wines above 8 British pounds in the UK, irrespective of country of origin, Delegat executive chairman Jim Delegat told shareholders at their annual meeting in Auckland, while Oyster Bay pinot noir is the best-selling pinot noir above 9 pounds.

Notes to the NZX show Delegat told investors that the price rises would be introduced in the second half of the financial year, which would be between January and June 2017.

The issue of price rises in the UK following the collapse in sterling is a sensitive one. The largest supermarket in the UK, Tesco and consumer goods group Unilever clashed over a price rise of Marmite, with the product pulled from the shelves in October. The chief executive of Tesco, Dave Lewis, responded with an interview in which he said consumers should not be asked to pay "inflated prices" due to currency fluctuations.

The New Zealand dollar has risen by 20 percent against the British pound since a year ago, and by 13 percent since June 23, when Britain voted to leave the EU.

Delegat is still aiming to increase sales in the United Kingdom, Ireland and Europe by 22 percent to 849,000 cases by 2021. However, this is dwarfed by the target to increase sales in North America to 1,681,000 cases by 2021, a rise of 66 percent.

Jim Delegat warned that it was difficult to forecast financial performance due to the exchange rate volatility. On current rates, it is forecasting an operating profit in line with this year's net profit after tax of $37 million.

He also confirmed that their sites had suffered no material damage from the Kaikoura earthquake.

Shares in Delegat were unchanged at $5.80. They've fallen 1.7 percent since the start of the year.

BusinessDesk.co.nz

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