Oeneo and the Diamond route to recovery

Related tags Wine Chardonnay

Figures released today confirm that the mere unveiling of the
taint-proof Diamont cork improved sales of all Oeneo closures in
the last half of 2004. But can this boost be transferred to its
barrels division? asks Kim Hunter Gordon.

Oeneo closures first announced the breakthrough Diamond Process​ at the end of April last year.

The technology was jointly developed with the French Atomic Energy Commission. It selectively removes offending molecules (haloanisoles) from raw cork material using carbon dioxide in a supercritical (highly compressed) state as a solvent; a technique similar to that used to decaffeinate coffee beans.

Results show that from the third quarter of 2004 Oeneo's sales of closures had begun to improve, reaching a growth of 4 per cent in the final quarter on 2003, following a two-year decline. This success, says the company, was driven by a pick up in sales of sparkling wine closures and Altec, the predecessor to Diamont.

Spokeman Nicolas Serpette said that coming up with the Diamond technology had "increased the confidence that customers have in our capacity to deal with addressing their needs."​ The pickup in sparkling wine closures, he said, had also been driven by efforts Oeneo had undertaken to win back lost custom in the Champagne region.

In a press release the company cited the renewed success of the Altec closure as "confirmation of the validity of strategic decisions at the end of the year."​ In December Oeneo announced that it is to cease manufacturing natural corks in order to focus on its technological closures like Altec.

Serpette said that the company wished to provide a complete range of closures and would therefore still distribute natural cork that it has bought "semi-finished"​ on the trade market. Oeneo has also recently disclosed that it will start providing screw cap closures, and although these will also be manufactured elsewhere.

"We are the only closure manufacturer not to concentrate on one solution,"​ said Serpette. "We do not say that any one is the best for all wine. When an Oeneo salesman arrives, he assesses the wine; its quality, chemistry, how it is to be marketed, priced. He will suggest what is best for that particular wine."

The colossal failure of Oeneo's Bloomfield oak stave mill America, which it sold​ earlier this month, reflects the trends that have brought down figures for Oeneo's barrel division; oak alternatives (such as woodchips) continue to appeal to lower priced wines and American barrels are accused of being "too woody"​ for the higher priced category.

The weakness of the dollar might also have harmed Oeneo's trans-atlantic barrels business but sales had already started falling in the third quarter before the dollar's slide. Oeneo would not release details of how sales of French and Eastern European oak had fared in comparison to American oak.

But if the kudos which Diamont has given the closures division can be shared with the barrels division, then customers might start choosing Oeneo before they've decided which oak product they need.

Oeneo has improved its balance sheet from selling off unprofitable units, but the restructuring will not stop there. Serpette told BeverageDaily.com​ that "more elements will go,"​ though he did not say which.

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