First gain for two years
Australian Vintage (formerly McGuigan Simeon Wines), the country’s third largest winemaker, unveiled its first net profit in two years on 27 August 2008.
The McGuigan name is synonymous with Australian winemaking. Four generations of the McGuigan family have made wine their life, thus demonstrating a deep commitment and passion for Australian wine. But for the past two years the company has been struggling not least because of its focus on non-branded and bulk products.
In February 2008 shareholders voted that the name McGuigan Simeon Wines should be changed to Australian Vintage Limited. This was explained by the CEO Dane Hudson as a necessary move to unite several brands under a single umbrella term. He emphasised that the change in name had nothing to do with the label’s reputation. The Riverland Winegrape Growers Association in South Australia had claimed there was consumer resistance to the McGuigan Simeon label because of the ruthless way the company had dealt with growers’ contracts.
Be that as it may, the switch to branded wines has begun to pay off for Australian vintage, which recorded its first loss, of AUD 5.9 million, in the financial year 2006/2007. It improved during the past year to post an AUD 1.3 million profit, which Chairman David Clarke called “a strong turnaround”.
However, four years ago the company posted a record profit of AUD 40.2 million.
Clarke and CEO Dane Hudson now unveiled results, which showed that sales of branded wines had increased 10.5 percent, branded wine exports increasing 22 percent. Non-branded sales were 34.4 percent.
Australian Vintage has focused hard on profit versus sales and took a conscious decision to build new and existing brands at the expense of commodity wine. CEO Dane Hudson said that further asset sales, other than the Loxton (SA) winery, were not contemplated and the company expected only small growth in the immediate future as the industry countered the effects of a domestic wine glut, softening export demand and a high Australian dollar.
