How Australian Vintage’s Poco Vino Is Fueling a Profit Surge Ahead of FY26

FY25 Financial Performance

Australian Vintage Limited (ASX, AVG) closed FY25 with a revenue of $257 million, marking a slight 1% decrease compared to the prior year. However, the company delivered a remarkable turnaround in profitability, with EBITDA soaring 129% to $15 million and EBIT doubling to $1 million. This profit surge underscores the effectiveness of AVG's strategic initiatives amid a challenging global wine market.

Despite headwinds including market softness in commercial red wines and one-off costs related to new UK producer responsibility regulations, AVG managed to maintain and even grow market share in key regions such as Australia, New Zealand, and the UK. The company also strengthened its balance sheet by reducing inventory and net debt, supported by expanded financing facilities with NAB.

Strategic Plan Execution

AVG is progressing steadily on its three-year strategic plan centered on four key levers, reducing inventory and net debt, generating free cash flow, growing revenue through innovation and new markets, and optimizing operational costs. The company is targeting a positive free cash flow position by FY26, a milestone expected to be driven by disciplined cost control and enhanced operational efficiencies.

Key to this strategy is the global rollout of Poco Vino, a consumer-led innovation launched in 2025 that has exceeded sales expectations, particularly in the UK. Poco Vino’s convenient format and appeal to millennials and lapsed wine drinkers position it as a game changer in the wine category. Pre-orders for FY26 have already surpassed $15 million in net sales contribution, signaling strong momentum.

Brand and Market Expansion

Beyond Poco Vino, AVG continues to invest in its core and premium brands, including McGuigan and Lemsecco, which are delivering profitable growth across global markets. The company’s innovation pipeline and sponsorships, such as with Cricket Australia, are designed to deepen consumer engagement and expand geographic reach, notably into Asia and North America.

Strategic acquisitions like MadFish, with international ownership outside Australia, further bolster AVG’s portfolio and distribution capabilities. The company is also actively optimizing grape sourcing by exiting fixed-cost leases and shifting towards more flexible supply arrangements, enhancing cost efficiency and inventory management.

Outlook and Challenges

Looking ahead, AVG plans to maintain its core brands in a softening market while accelerating margin-accretive innovation and expanding Poco Vino’s global presence. The company is pursuing partnerships and acquisitions to premiumise its portfolio and improve operational leverage. Supply chain optimization remains a priority, targeting reductions in international logistics costs and improved asset utilization.

While the outlook is positive, the company acknowledges risks from consumer demand fluctuations, agricultural conditions, foreign exchange volatility, and geopolitical uncertainties. Nonetheless, AVG’s disciplined approach to cost control and innovation-driven growth positions it well to capitalize on emerging opportunities.