Australian Vintage Limited has locked in a $128 million refinancing deal extending to 2029 and reported a significant cash flow turnaround in FY26, driven by innovation and strategic acquisitions.
- Debt facilities increased to $128 million with option to 2029
- Second half FY26 cash generation of +$20 million
- Poco Vino global expansion fuels sales growth
- Net debt expected at $90 million by June 30
- Investments deliver 69% internal rate of return
Refinancing Extends Debt Facilities Amid Growth Ambitions
Australian Vintage Limited (ASX:AVG) has agreed to refinance its debt facilities totaling $128 million until March 2028, with an option to extend for an additional year to 2029, pending final documentation. The refinancing includes a $5 million increase to support the global expansion of its innovation brand Poco Vino, particularly targeting the US market in the second half of FY27. The interest rate on the new facilities remains consistent with previous arrangements, reflecting lender confidence despite ongoing inflationary pressures and geopolitical uncertainties.
Cash Flow Turnaround Driven by Innovation and Strategic Investments
FY26 has marked a transformational year for Australian Vintage, with second half cash generation reaching +$20 million, a stark reversal from a -$9 million cash outflow in the prior year half. The full year underlying cash flow, excluding investments and asset sales, improved by approximately $33 million compared to FY23, underscoring the effectiveness of the company’s turnaround strategy. Despite increased costs linked to the war in Iran and inflation, the company remains on track to achieve free cash flow neutrality for the year.
These results build on momentum from the first half, where the company made strategic investments totalling around $15 million, primarily in innovation and acquisitions. Notably, investments in Poco Vino and Lemsecco product launches, as well as the acquisition of the MadFish brand and the distribution deal with Invivo in the UK, account for two-thirds of this spend and are delivering a combined internal rate of return of 69%. Operational efficiencies, including lease exits and staff reductions, comprise the remainder of the investments and are expected to pay back within a year.
Poco Vino and MadFish Drive Sales Growth and Market Expansion
Poco Vino, launched eight months ago, is now available in over 8,000 stores across nine countries, selling approximately 12,000 bottles daily. The brand’s portfolio will more than double in FY27 with the addition of sparkling wines and a premium ‘Atlas Series’ targeting global travel retail at a $25 recommended retail price. This expansion is projected to push Poco Vino’s annualised sales beyond $20 million in FY27.
Meanwhile, the recently acquired MadFish brand and the Invivo distribution partnership in the UK are adding over $12 million in annualised net sales. MadFish’s performance has accelerated since acquisition, with a 54% sales increase over the last 12 weeks compared to the prior year. The Invivo deal, secured last year, is boosting presence in Tesco, Waitrose, and independent retailers across the UK and Ireland, helping Australian Vintage maintain a solid foothold despite market headwinds from tax reforms and recycling regulations affecting the broader Australian wine segment.
Core Brands Stabilise While Inventory Management Optimises Cash
Core brand McGuigan remains resilient, outperforming the Australian market with a 1% volume increase and leading the zero-alcohol wine category in the UK with 7% growth. Total Australian Vintage volume in the UK holds steady at 6% market share, while in Australia, the group is outpacing the market with a 4% scan growth compared to 0.7% for the category.
Inventory reduction continues to be a priority, with working capital optimisation resulting in expected year-end bulk wine storage of approximately 90 million litres. This balanced inventory level supports future vintage needs while freeing up cash, complementing the company’s broader efforts to improve financial flexibility.
These developments build on the company’s earlier reported steady first-half sales and the Invivo distribution partnership that are central to its growth and cash flow improvement strategy.
Bottom Line?
Australian Vintage’s refinancing and strong cash flow turnaround set the stage for accelerated growth in FY27, but geopolitical risks and supply chain constraints warrant close monitoring.
Questions in the middle?
- How will the Iran war and shipping disruptions affect FY27 sales timing?
- Can Poco Vino sustain its rapid growth as it expands into premium segments?
- Will inventory optimisation continue to support cash flow without impacting supply?