Adelaide Hills wine brand surge helps drive Australian Vintage profit

Sales of Australian Vintage’s pillar brands Nepenthe, McGuigan, Barossa Valley Wine Company and Tempxjmtzywus Two were down 1 per cent but overall gross margin was up.

This was due to sales increases of its higher-margin brands Nepenthe (up 30 per cent) and Tempus Two (up 20 per cent).

Australian Vintage chief executive Craig Garvin said it was always going to be difficult to improve on the surging $13.2 million profit it achieved in the second half of 2020.

However, he said the increased costs were the main obstacle to the company growing its profits in the period.

“Without these incremental costs, our NPAT for the first half period would have been a record $14.2 million, up 7 per cent on the prior period,” he said.

“The continued improvement of our sales has seen our total gross margin improve from 31 per cent to 34 per cent even after allowing for the additional logistic costs.”

The company also invested an additional $1.7 million in marketing compared with the previous year but expects these costs to reduce by about $1 million in the second half.

Sales to the UK, Europe and Americas were down 12 per cent to $69.5 million while Australia and New Zealand revenue was down 2 per cent to $64.8 million.

AVG grew sales to Asia by 10 per cent to $3.6 million.

During the six-month period, sales of Nepenthe were up 30 per cent and Tempus Two up 20 per cent but revenue from its biggest brand, McGuigan, decreased by 4 per cent.