The Wine Society collapses with $1.45m in debts
The Wine Society - which once shaped the drinking preferences of almost 100,000 people, mainly in Sydney - has slumped into administration after no member wanted to be on its board.
The 74-year-old co-op owes $1.45 million to unsecured creditors, including some of the best-known names in the industry, such as Tyrrell, Casella and Oatley.
The Daily Telegraph can reveal the winemakers and scores of smaller outfits may get as little as 15 cents in each dollar of debt.
There is, however, good news for The Wine Society's 20,000 members, who signed up for $50 each, with the outgoing directors negotiating a "super special" discount offer from the Wine Collective, which took over the Society's day-to-day operations three years ago.
Market forces and mismanagement combined to sink the society, which began with the aim of increasing the range of wine available to consumers and educating them about good drops at tastings, themed dinners and master classes.
"It might have looked pretty attractive in the 1950s, when there wasn't a lot of competition for what people did in their leisure time," departing chairman Geoff Ballard, who joined in 1970, told The Telegraph.
The society's administrator Giles Woodgate said: "The idea of being a member of the Wine Society I think became inconsistent with that sense of sophistication when it comes to having a glass of wine.
"It's undeniably unfortunate to see an iconic brand slip into this situation.
"How the world's changed."
Mr Woodgate said not enough effort had gone into maintaining, if not growing, the membership base.
Geoff Goodworth - a Society director for 20 years, including its last - said marketing mistakes had been made, including an expensive foray into brewing.
"When the beer was finally sold to Woolworths I was a bit shocked at what it had cost to establish," he said.
Mr Ballard said another problem was that the Society's co-operative structure had limited its access to finance.
The Wine Collective's CEO Lloyd Heinrich said it had done its best to attract new members. "We spent a huge amount of money trying. It became increasingly clear that getting people to join this old Society was not going to be possible," he said.
Still, a royalty payment from the Collective of one per cent of sales to Society members did deliver a net profit of $239,000 in 2018-19 and $131,000 in the prior financial year.
The Society planned to continue using that surplus to slowly repay its long-term debts to trade creditors. But that plan came unstuck when no member nominated to join the board prior to last November's annual meeting. With the current directors wanting to retire, an administrator had to be called in.
Mr Woodgate said he had three assets to sell: the Society's shareholding in the collective, its distribution list and the ongoing right to royalties from member sales.
On top of the $1.45 million owed to 125 trade creditors, the Society has $300,000 in unsecured borrowings.
Originally published as The Wine Society collapses with $1.45m in debts