Australian Vintage has secured a $128 million debt refinancing through to March 2028, with an option to extend a further year to 2029, as the McGuigan wines owner reports a significant second-half cash turnaround and upgraded sales momentum heading into FY27.
The refinancing, agreed subject to signing of final documentation, increases facilities by $5 million on the previous arrangement to support the global expansion of innovation brand Poco Vino, with a US push planned for the second half of FY27. Interest rates are in line with the previous facility.
The announcement arrives as AVG confirms it remains on track for its core FY26 deliverable of free cash flow neutrality, excluding investments, despite headwinds from the war in Iran and ongoing inflation.
Second-half cash generation is tracking at positive $20 million, a turnaround of approximately $29 million against the prior comparative half. Full-year net debt is expected to finish at approximately $90 million, as previously guided, with $15 million of that figure representing growth investments.
The result marks a significant improvement on FY23, when underlying net cash outflow, excluding asset sales and investments, was negative $33 million. AVG is targeting positive underlying cashflow of $10 million in FY27, which would be the first time the group has been net cash flow positive since 2021.
Poco Vino momentum
Poco Vino, launched eight months ago, is now ranged in more than 8000 stores across nine countries and selling approximately 500 bottles an hour. AVG said annualised sales will exceed $20 million into FY27.
The brand’s current six SKU still wine range will more than double in FY27 with the launch of a sparkling portfolio comprising Moscato, Prosecco and flavoured Spritzes, adding eight further SKUs. A premium tier called the Atlas Series is also planned for global travel retail at a $25 recommended retail price.
Poco Vino pioneered a ‘make where sold’ sourcing model, drawing on production hubs in France and Italy for Europe, Napa Valley for the US, and Merbein in regional Victoria for Asia Pacific. The model is designed to limit shipping lead times and lift margin while meeting consumer preference for locally proximate production.
Brand and portfolio performance
Sales run rate for the second half is 10 per cent higher than the first half, with revenue growth of positive five per cent expected in H2 against negative two per cent in H1. Iran conflict disruptions create some residual risk to shipment timing in the final month of the financial year, but AVG said the cash flow target is not at risk.
Lemsecco is scanning 116 per cent higher in Australia year on year and has now entered the US and Chinese markets. MadFish, acquired in H1, and a distribution deal for Graham Norton wines in the UK together contribute an annualised run rate of more than $12 million in net sales. MadFish has posted 54 per cent growth in the last 12 weeks against the same period last year, with new ranging across Tesco, Waitrose and independent retailers in the UK and Ireland.
McGuigan, the group’s flagship commercial red brand, is outperforming the market in Australia, scanning positive one per cent by volume against a total red wine category in the McGuigan price range that is down 10 per cent. In the UK, McGuigan is tracking in line with the broader Australian wine segment, which is down four per cent, as the market absorbs the fall-out from duty reform and extended producer responsibility legislation. McGuigan remains the number one zero-alcohol still wine brand in the UK, growing seven per cent in the past year.
Total AVG is holding a six per cent share of the UK wine market. In Australia, the group is outperforming the market, scanning positive four per cent against total wine category growth of 0.7 per cent.
Inventory and supply chain
Bulk wine inventory is expected to end the year at approximately 90 million litres, down significantly on FY25 levels, as AVG actively manages working capital requirements. The group said the position represents a balanced level taking into account future vintage requirements.
Approximately two thirds of the group’s approximately $15 million in H1 investments went into top-line growth, including the Poco Vino and Lemsecco launches, MadFish acquisition and Invivo distribution onboarding in the UK. Those investments are generating a combined internal rate of return of 69 per cent. The remaining third targeted fixed supply chain cost reduction through lease exits and reduced staffing, with a payback period of under one year.
