Australian Vintage (AVG), the producer behind well-known brands like McGuigan, Tempus Two, and Barossa Valley Wine Co, has reappointed Craig Garvin as its CEO, just six months after parting ways with him over what the company described as “a lack of judgment” inconsistent with its values.
Garvin, who will return to lead the company on Monday, is hailed by chairman James Williamson for his proven leadership, extensive industry knowledge, and strong relationships with business partners. Williamson believes Garvin’s reappointment is key to strengthening the company and capitalizing on growth opportunities both in Australia and overseas.
Garvin’s abrupt departure in May came at a critical time when Australian Vintage was engaged in merger talks with Accolade Wines’ new owners, Australian Wine Holdco. These negotiations collapsed when Holdco opted to purchase Pernod Ricard’s wine interests instead. At that point, AVG was grappling with severe trading challenges, exacerbated by a surplus of Australian wine, particularly at the lower price points where AVG’s products are positioned.
The company reported a staggering AU$93 million loss for its 2024 financial year, a sharp contrast to the AU$4 million profit it posted in 2022/23. The loss was largely attributed to substantial write-downs, including AU$37.7 million in goodwill impairment and AU$36.6 million in inventory losses.
Despite these setbacks, AVG achieved a modest 1% increase in sales, totaling AU$260.6 million. Underlying earnings rose by 25%, reaching AU$13.2 million. Excluding the one-off charges, the company’s net post-tax profit would have grown by 26% to AU$5.3 million.
AVG also faced a leadership vacuum this year with the enforced retirement of Peter Perrin, who had taken over as interim CEO after Garvin’s dismissal due to health issues. Following these challenges, the board has been working on a revised business strategy, aiming to generate free cash flow of AU$20 million and achieve a return on capital employed of 8% by the end of the 2027 financial year.
In line with its restructuring efforts, AVG made significant decisions in July, such as terminating its lease on the Balranald vineyard in New South Wales’ Riverina region and selling its Lyndoch vineyard to Seppeltsfield. These moves are expected to reduce the company’s tax losses and improve its financial position by AU$10 million.
Williamson emphasized that Garvin’s return, after such a turbulent period for the company, underscores the board’s commitment to restoring shareholder value. Since April, AVG’s stock price has plummeted more than 50%, and it has lost nearly 80% of its value since the spring of 2022.
As part of his reappointment, Garvin will receive an annual salary of AU$600,000, plus a long-term incentive plan. His most recent salary package in FY23 was AU$712,941, including salary and fees.
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