Global growth

Time for a short geography lesson. New Zealand grape land totals around 15,000 hectares. Australia’s is 150,000, California’s close to 300,000, France’s 900,000, Italy’s 800,000 and Germany’s close to 300,000. There are also the grape lands of South Africa and South America, plus all the other crops grey mould attacks, including strawberries, kiwifruit, peonies, blackcurrants and even cabbage. Think “export” again.

No wonder chief executive John Scandrett thinks the potential of this company is “really very spectacular”.

Now for the hard basket stuff. It has cost Botry-Zen around $6.1 million to get this far. That’s initial capital of $5 million from a 10c a share issue in 2001, and additional capital from the sale and leaseback of its Dunedin factory. This amount doesn’t take account of the research money invested by product cornerstone funders New Zealand Winegrowers and HortResearch (see sidebar).

Scandrett says the company needs to upscale by 100 to 200 times: it needs to register the product overseas in order to make sales offshore; it urgently needs to upgrade its Dunedin production factory; and, if all goes to plan, one day in the not-distant future it will need to build a new factory. (Because the granulated form of Botry-Zen is so transportable, the company hopes to keep all production in New Zealand.)

All this will take money. The company, whose momentum Scandrett agrees has slowed with the death of major investor and capital-raising master, Howard Paterson, in 2003, recently posted a net loss of $758,000 for the year to March 31. The previous year the net loss was $1.2 million; the year before that, $1.1 million, and in 2002, $892,000. The losses were projected.

The company announced in early August that it was cancelling 90 million of its shares ahead of a $4.2 million rights issue. Interests associated with its three principal shareholders, Max Shepherd, Tak Hung, and Otago Trust, each agreed to cancel 30 million shares. Those shareholders have each agreed to subscribe for about $300,000 of rights and Botry-Zen is arranging for the remaining$3.3 million in the pending issue to be underwritten.

“The plant we have here is only very much on a pilot scale, so we need to expand for New Zealand and offshore markets,” Scandrett says.

When Unlimited went to press, Botry-Zen shares were trading at 6.5c on anorexic volumes. They debuted on the alternative stock market at 10c in 2001, and at 14c on the main board in November 2002.

So, why would you want to invest in Botry-Zen in these non-biotech-friendly investment times? What’s so special about the company and its product(s)? And is the product unique?

Chemical spraying has been de rigueur in the grape-growing business but winemakers, retailers and consumers are increasingly demanding residue-free plonk from clean, green origins. Also, as Te Mata Estate viticulturist Morgan notes, botrytis has become resistant to some chemicals. Morgan has used Botry-Zen on part of Te Mata vineyard for five seasons now. He got freebie trial product for the first four years, but was confident enough about the results that he bought enough to spray on ten hectares for the 2004-5 growing season. He is “very pleased” with the investment.