Poco Vino – the small-format bottles of wine launched by Australian Vintage Ltd (AVG) late last year – is on the way to becoming a global hit.
Now available in more than 8,000 stores in more than nine countries, Poco Vino is selling at a rate of 500 bottles an hour – or the equivalent of 12,000 bottles a day.
The wines come in a sleek 187ml pocket-sized format and retail for $7 each.
The range of six still wines will more than double over the next year with the launch of a full sparkling portfolio – Moscato, Prosecco and a range of flavoured Spritzes will add another eight SKUs to the portfolio.
The premium Poco Vino range called Atlas Series ($25 RRP) will be launched in global retail stores around the world.
Lemsecco is also selling well and is now available in the USA and China.
AVG revealed the news about Poco Vino as the company announced the successful refinancing of its structural debt for two years through to March 2028 with an option to extend into 2029.
“In a transformational year for the group, AVG’s execution of the plan is showing strong momentum with a run rate for the second half +10 percent higher than that of the first half, reflecting a second half revenue growth of +5 percent vs prior year,” the company said in a statement to the ASX.
“The company has successfully launched and exceeded sales expectations of core innovation Poco Vino, has made strategic investments generating strong IRR (internal rate of return), has reduced the company costs to manage growing inflation and war impacts and has achieved the company goal of free underlying cashflow neutrality, excluding investments.
“The company net debt is expected to finish at about $90 million by June 30. This is a strong result as it reflects positive cashflow generation of $20 million in the second half, a turnaround of about $29 million from the comparative half in the prior year.
“This is a significant achievement versus FY23 when underlying net cash outflow, cashflow excluding asset sales and investments, for the year was negative $33 million.
“In a year where cash generation is the key outcome, Australian Vintage made the important decision to invest into the future in H1 to drive growth into H2.
“Investments have been undertaken in two key areas, namely investment in top line growth and margin and reductions in fixed supply chain costs.”
“Investments into new business including Poco Vino and Lemsecco innovation launches, the acquisition of MadFish internationally and the onboarding of Invivo distribution in the UK, represent two thirds of the about $15 million investments made and are delivering a combined IRR of 69 percent,” AVG said.
“Investments into reducing the fixed supply chain through lease exits and reduced staffing requirements represent the balance and pay back within a year.”
AVG has stated previously there are challenges facing the commercial red portfolio led by global icon brand McGuigan.
Recent investments into a National Cricket Australia partnership has “reignited consumer connection” with the brand. Total red wine in the McGuigan price range is minus 10 percent in Australia, while McGuigan is flat.
“This investment approach is underway in the UK with recent branded performance down on expectations but broadly in line with Australian wine, as the fallout of significant tax reform across duty and recycling collection and processing impacts wine sales across the region,” AVG said.
Inventory reduction has been a strong focus for AVG with previous guidance that inventory levels would be significantly lower than FY25.
AVG can confirm that inventory is actively being managed down to generate cash returns, decreasing working capital requirements, and is expecting to end the year at about 90 million litres in bulk wine storage.
“This represents a balanced inventory position taking into account future vintage requirements,” AVG said.
“The focus on optimising our inventory holdings is continuing.
“As the company has stated previously, FY26 was a transformational year to demonstrate to shareholders that a turnaround is possible.
“We remain on track to achieve the company’s core deliverable of neutral underlying cashflow.
“We are particularly pleased to see the growth in sales in the second half over the first half despite sales and cost impacts due to the Iran war.
“We expect the growth rate into FY27 will continue to accelerate into future years of the plan as we move to +$10 million underlying cashflow, excluding investments target for FY27.
“Being net cashflow positive, and reducing full year net debt, will be the first time the group has achieved positive
group cash since 2021 during Covid.”
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