Australian Vintage’s interim financial report for FY25 reflected “early progress” in turning the winemaker’s fortunes around, CEO Craig Garvin said. He also took the opportunity to launch Poco Vino, saying the format-based wine will create a new category in the wine industry.
The company had a turbulent 2024. Merger talks with Accolade Wines fell over after Accolade’s bid to restructure its largest grape supply contract was unsuccessful, which triggered AV to enter a trading halt as it put together a heavily discounted capital raise, debt refinancing, and trading update.
In May it told the ASX it expected its debt at the end of FY24 to be between $70-75 million when its guidance had been $43-50 million.
When it resumed trading in June, its market capitalisation almost halved.
Garvin was dismissed in May for “lack of judgement” and then reappointed in October after the entire board had been replaced.
Garvin said 1H25 results represented, “early progress in restoring shareholder value, balancing cost discipline with targeted investments for sustainable growth, with positive cash flow, reduced debt and accelerated brand growth as key measures”.
“These results highlight that Australian Vintage is an agile industry leader with innovation as a core capability. We are focused on delivering profitable growth while maintaining strong cash flow control,” he said.
Cost controls and operational efficiencies had delivered an 80 per cent improvement in operating cash flow. Its normalised total cash outflow was $(8) million, an $11 million improvement on the prior corresponding period (pcp) and its best performance in four years.
Operating cash outflow was $(2) million, the lowest in four years with 1H25’s cash outflow including two thirds of grower payments impacting the seasonality of AV’s cash flows.
Brand sales were 80 per cent of total revenue compared to 65 per cent in FY20 and expected to grow further as its Barossa Valley Wine Company set to relaunch into the Asia market.
McGuigan Zero is the #1 NoLo brand in the UK, and growing ahead of the category, recording 20 per cent growth. McGuigan Mid is leading the mid-category in the UK, Garvin said.
Premiumisation and innovation now count for 26 per cent of revenue and 37 per cent of margin – compared to seven and nine per cent in FY19.
While 2024 was bruising, AV maintained its program of product innovation and sustainability measures. It launched CTZN, a wine created using AI and designed to “push the boundaries of how AI can influence the world, moving beyond usage in just design, advertising, or packaging”.
Lemsecco, a ready-to-drink spritz, and Tempus One Peach were also launched.
But the star of AV’s interim financial report was launched Poco Vino. Garvin said it “pioneers a “make where sold” wine sourcing model, utilising France and Italy for Europe, Napa for the USA and Australia for the Asia Pacific driving significant cost efficiencies while aligning with consumers’ willingness to pay a higher price for convenience.
“Early orders are extremely encouraging and ahead of expectation. Major UK and Australian retailers have agreed to range the product, which is set to launch in the 2025 calendar year. With preorders for FY26 expected to exceed $8 million, this innovation represents the most exciting launch in AVG's history.”
He added that China and the rest of Asia represented a significant upside to the business in the short to medium term. AV has partnered with COFCO (China’s leading wine distributor), and Oceanus (a key distributor in Asia), with shipments to Asia expected to increase by double digits for the full year.
