By Andy Young

Australian Vintage Limited (AVL) has posted a $1.6m profit for the first half of the year, having been negatively impacted by $2.7m as a result of unfavourable exchange rates.

The company said that its Tempus Two brand is performing exceptionally well, that it has strategies in place to improve its UK and Europe performance and that it has just secured a nationwide distribution deal in the United States with Palm Bay.

Speaking at the results presentation, Chief Executive Neil McGuigan said: “Obviously it is a disappointing result from where we wanted to be, but it is all down to the exchange rate. We are resilient people, we are in agriculture, so we do take some hits, but the plan is still the plan and we still need to increase our sales footprint in the UK.

“Our branded sales continue to perform well with volumes up 3 per cent against market conditions that had seen wine volumes decline. However, due to the unfavourable exchange rates actual branded sales declined. In the UK market, sales volumes of our McGuigan brand grew by 4.3 per cent despite a total wine market decline of 4.1 per cent. Our McGuigan Black Label red remains the biggest selling red wine in Australia.

He added: “We recently signed a distribution agreement with one of the top US distributors, Palm Bay International.  This is a great step forward for this Company in continuing to create a truly global footprint for our brands.  The USA is a hard market to crack and it will take time, but I have great confidence in the quality and depth of the team at Palm Bay.  As Palm Bay’s exclusive Australian supplier, we believe we have an exciting future together.”

That partnership will start with Tempus Two wines and will be followed with McGuigan wines in around six months. 

Speaking of the Australian market, McGuigan added: “There are also challenges domestically as well and we have had incredible growth over the past five years. But we need to respect our brand and sometimes we need to take a bit of a breath as well, because we are in the crosshairs of a number of major supermarkets and we need to be very aware of price point. We don’t want to be driven down to a price point where we would have no brand in a couple of years’ time. We just need to be very careful as to how we manage that.”

Looking ahead McGuigan added: “We have a singular focus on quality in this organisation and we try to get that to flow down to all our brands.  The quality breeding that we have in this business will continue and I think that will hold us in good stead to continue to open up new opportunities. It is all steady as she goes, we will keep on doing what we did the year before.”

The Shout Team

The leading online news service for Australia's beer, wine, spirits and hospitality industries.

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