Australian Vintage Limited makes highest profit in a decade

Australian Vintage Limited (AVL) achieved its best result of the past decade with 79 per cent net profit after tax improvement for the 12 months to June 2021.

AVL's Chief Executive, Craig Garvin said, “The record result was very pleasing with continued growth in our portfolio of key brands. During the 12 month period, sales of our pillar brands of McGuigan, Tempus Two, Nepenthe and Barossa Valley Wine Company (BVWC) grew by 12 per cent to $195.1 million.

“This growth, together with the efficiencies generated from our recent capital spend, investment in our people and the favourable 2020 and 2021 vintages have underpinned the 79 per cent growth in NPAT. We are committed to our strategic plan, and it is showing positive signs for our future.”

Marketing spend was up by 46 per cent, mostly concentrated in the second half of FY21 with the business also making substantial investment in its staff, staff retention and improving its customer focus.

AVL was awarded the Australian Drinks Award for Supply Chain Management Award which Mr Garvin noted in today’s presentation to investors was “a significant achievement for AVL’s market reputation and credibility”.

Increased distribution, innovation and consumer engagement was key to AVL’s growth, particularly in Australia and the UK businesses.

The McGuigan Zero range has been an outstanding success in both markets and demonstrated the importance of innovation to the portfolio long term. The range is comprised of five de-alcoholised wines; a Shiraz, sparkling, rosé, Chardonnay and Sauvignon Blanc and made using Australian first cone technology, working at low temperatures to gently remove alcohol after the fermentation process, ensuring the wines maintain their delicate fruit flavours.

Australia and New Zealand saw contribution up 48 per cent to $9.0 million, with the McGuigan brand growing by 3 per cent due mainly to the performance of the McGuigan Zero range with sales growth of $5.0 million.

Tempus Two continues to grow with sales up 15 per cent, Nepenthe grew by 8 per cent and BVWC grew by 19 per cent.

The Direct to Consumer division, including cellar doors and clubs, increased contribution by $1.3 million as a result of the AVL’s investment in technology and the refurbishment of the McGuigan and Tempus Two Hunter Valley cellar doors.

In the next 12 months the Company expects to undertake a major upgrade to the Adelaide Hills Nepenthe cellar door.

McGuigan led the charge in the UK as well following investment in the brand and a major increase in retail distribution. Sales were up 17 per cent compared to the prior period and McGuigan Zero’s sales were $5m greater when compared to the same time last year and Zero now accounts for 5 per cent of all McGuigan brand retail sales.

Similarly, significant investment and distribution in the Tempus Two brand saw sales of this brand increase by 82% in the UK, albeit from f a relatively low base.

AVG’s direct exposure to the China market is small with less than 1 per cent of all sales going into China prior to the increase in tariff and the business seems to have weathered the impact of COVID with some increased sales through major retail chains but increased costs at production facilities through segregation of shifts and challenges with supply chain operations.