Can Poco Vino™ and Madfish Ignite Australian Vintage’s FY26 Turnaround?

Setting the Stage for Transformation

Australian Vintage Limited (ASX:AVG) has revealed a pivotal update on its fiscal 2025 performance and an ambitious outlook for 2026. The company is navigating through a challenging period marked by declining sales and negative cash flows, but it is positioning itself for a turnaround driven by innovation, strategic acquisition, and disciplined financial management.

FY25 is expected to close with a modest 3% sales decline, reflecting a soft market environment and the absence of major new product contributions. However, the company has front-loaded investments in new brands and packaging innovations, which have temporarily strained cash reserves but are designed to fuel future growth.

Innovation at the Forefront: Poco Vino™ and Lemsecco™

The standout initiative is the Poco Vino™ brand, a disruptive concept featuring wine in small 187ml bottles stacked horizontally on shelves. Launched in the UK in July 2025 and scheduled for Australia in October, Poco Vino™ has already surpassed pre-sale expectations, prompting Australian Vintage to accelerate investment in packaging and inventory. The company now conservatively forecasts Poco Vino™ to generate over AUD 10 million in net sales in FY26, up from an earlier estimate of AUD 8 million.

Complementing this is Lemsecco™, a sparkling citrus and Prosecco blend leveraging Australian-grown ingredients. With expanding distribution across multiple international markets, Lemsecco™ is projected to contribute over AUD 5 million in net sales in FY26, reflecting growing consumer interest in innovative, authentic beverage options.

Strategic Acquisition Strengthens UK Presence

In a move to bolster its international portfolio, Australian Vintage is acquiring the Madfish brand’s international rights (excluding Australia) from the Burch family, a respected name in Australian winemaking. Madfish adds a premium Western Australian label to AVG’s UK portfolio, balancing its existing red wine-heavy McGuigan brand with lighter varietals and premium price points. The acquisition also includes distribution rights for Howard Park across several key markets, enhancing the company’s global footprint.

Inventory and Financial Outlook

The company anticipates a higher inventory level at the end of FY25 due to declining sales and stockpiling for new product launches. This has contributed to a revised forecast of a AUD 13 million free cash flow outflow for FY25, despite significant improvements compared to prior years. Looking ahead, Australian Vintage expects a meaningful inventory reduction in FY26 as grape intake peaks and long-term grower contracts wind down.

Net debt is projected to end FY25 around AUD 76 million. Management emphasizes that this elevated debt level is a necessary short-term consequence of investing in the turnaround. The company expresses confidence that FY26 will mark a transformational year with mid-single-digit sales growth and a return to sustainable free cash flow.

Leadership Driving Change

New CEO Tom Dusseldorp, credited with spearheading the Poco Vino™ and Lemsecco™ innovations, is leading the charge to revitalize Australian Vintage. His focus on revenue growth, innovation, cash flow generation, and debt reduction over the next three years signals a clear strategic direction aimed at restoring investor confidence and market competitiveness.