Australian Vintage Limited (AVL) has unveiled a comprehensive plan for a “transformational” financial year in 2026 as it confronts recent declines in sales and persistent negative cash flows.
In a statement to the ASX, AVL described itself as being in the early phases of a business turnaround, with tough decisions made this year laying the groundwork for renewed confidence in the year ahead.
A key element of AVL’s strategy is the acquisition of the Madfish brand. The company anticipates this move will be “earnings enhancing from year one,” signaling an important step toward revitalizing its portfolio.
According to the ASX release, AVL has entered a conditional contract with the WA-based Burch family—regarded as one of Australia’s foundational wine families—to acquire international ownership of Madfish, a dynamic Australian wine brand with strong presence in the UK. Additionally, AVL has secured distribution rights for Howard Park wines in the UK, Ireland, Europe, and Canada, expanding its global reach.
While Madfish’s revenue contribution is currently modest relative to AVL’s broader portfolio, the brand holds strategic importance in the UK market. It offers a scalable volume of over 200,000 cases and balances AVL’s red wine-heavy McGuigan brand by adding a lighter varietal range at premium price points, enhancing the company’s international premium wine offerings.
Beyond acquisitions, AVL outlined its financial outlook for the current and next fiscal years. The company expects FY25 sales to decline by approximately 3%, reflecting a soft market environment and limited innovation this year. This decline impacts inventory and net debt, reinforcing management’s urgency to reverse sales trends in FY26 with targeted growth initiatives.
AVL also anticipates elevated inventory levels at the end of FY25, driven partly by excess wine intake for Poco Vino and Lemescco brands. Consequently, the company has revised its free cash flow forecast for FY25, projecting an outflow of roughly $13 million—an improvement of $15 million over the previous year but still a setback.
Looking ahead to FY26, AVL forecasts a significant reduction in inventory, as wine intake peaks with the 2025 vintage and long-term grower contracts begin to phase out over the next three years.
The company expects to close FY25 with net debt near $76 million. AVL emphasized that bankers are supportive of its heavy investment strategy this year aimed at reversing sales decline and addressing costly wine contracts. These efforts, combined with new sales initiatives and the Madfish acquisition, are expected to pivot AVL onto a growth trajectory.
With reduced grape intake anticipated over the coming years and transformational innovation underway, AVL expressed confidence in generating sustainable free cash flow starting in FY26 and maintaining positive momentum thereafter.
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