AUS: 'New world' demand buoys wine barrell business

(BT) - International sales could account for around half of annual turnover for Melbourne wine barrel innovator Flexcube by the middle of the year, based on demand in "new world" wine regions in the United States and South America.

The company is targeting growth of more than 40 per cent, to $5.2 million after tax, for the 2014-15 financial year, provided it can maintain its current trajectory.

But this will test the determination of owner and chief executive, Peter Steer, to keep manufacturing his patented oxygen-breathing polymer and oenological oak wine barrels in Australia.

Mr Steer said wine makers in new world regions such as the US, South Africa and Chile, which the company is targeting, are strict about cost efficiency making them more open to innovation.

This is good for Flexcube who claims its barrels last four times longer than expensive oak barrels, and believes it can reduce capital and operating costs for barrel matured wine by as much as a third.

New wine technology can be offensive to traditionalists.

Flexcube is slowly trying to gain a foothold in the tougher and more tradition bound European market with a presence in France.

"We always intended the company to service the international market, as Australia represents merely five per cent of the global barrel market," said Mr Steer.

Speaking to The Australian Financial Review from California's Napa Valley, Mr Steer expressed disappointment and pessimism about the future of Australian manufacturing in general.

"Our cost base is way too high," he said. "I look at our industry and sometimes despair at the competition at global level."

He feels many Australian companies seem incapable or disinterested in competing internationally.