Australian Vintage has lined up a pivot of its business strategy with a view to generating a healthier cash flow moving forward.
The change, which focuses on the company’s export markets, will see inventory invested into areas of the wine category where AV said it “does not compete due to high competitive discounting”. While specific details were scant, the group expects the revised approach to “drive revenue and cash flow growth”.
“The change in strategy is targeting a free cash flow of +AUD20m (US$13.4m) per annum by the end of fiscal 2027 (to the end of June),” the company noted, adding that it would steer clear of “discounting (its) pillar brands” such as Tempus Two, Nepenthe and McGuigan.
“Australian Vintage derives approximately two thirds of its revenue from export related markets,” the group said in a stock market filing. “It has maintained and grown market share over the past few years, whilst delivering a strong premiumisation and innovation programme, currently representing one third of its margin.
“However, the market that Australian Vintage operates in is challenged by deep competitor discounting, with AVG identifying a number of revenue growth opportunities within those markets that it is currently not accessing.”
A greater level of detail will be shared on Friday this week, when the company posts its fiscal 2024 figures. Twelve-month sales to the end of June inched up 1% on the year prior to AUD261m, according to a bullet-pointed update in yesterday’s filing.
In what’s been a lively few months for AV, the producer & brand owner saw its merger negotiations with Accolade Wines collapse in May, two weeks after CEO Craig Garvin was released with immediate effect having “engaged in conduct that … displayed a lack of judgement”.
