Australian Vintage sacks CEO

Australian Vintage, Australia’s third largest wine group, has abruptly sacked its chief executive, Craig Garvin.

AV, whose key brands include McGuigan Wines, Tempus Two and Nepenthe, said it had ended Garvin’s employment “for engaging in conduct that, in its view, displayed a lack of judgement and was inconsistent with the values of the company and the high standards expected of its chief executive officer”.

The firing was immediate following “careful consideration and discussion” between Garvin and the company.

Garvin now says he is considering whether to begin legal action against Australian Vintage for wrongful dismissal and defamation.

Disappointed

“While we are disappointed by the circumstances leading to his departure, we believe this decision is in the best interests of the company and its stakeholders,” said Richard Davis, AV’s chairman.

“The board remains committed to upholding the highest standards of conduct and accountability for all employees, including senior leadership.”

No further details about his conduct have been given for Garvin’s departure but it comes at a very delicate time for the company.

As a result of the turmoil in the Australian wine industry Australian Vintage revealed in February that it is discussing a possible merger with the second largest group, Accolade.

Accolade

Accolade faced a mountain of debt and was sold off earlier this year by investment group Carlyle to a Bain-led consortium of international investors. It is now named Australian Wine Holdco Limited (AWL).

Carlyle had bought Accolade, whose brands include Hardys, Petaluma, and Grant Burge for $AU1 billion in 2018.

That investment was hit by the perfect storm of consumers moving away from commodity wines and China effectively shutting Australia’s largest export market by imposing punitive tariffs in a row about where Covid 19 originated.

AV says “Discussions [with AWL] are continuing, although there remains no certainty that any transaction will eventuate.”

Obstacle

But Garvin’s firing comes at a sensitive time for both sides.

It had been widely speculated that Garvin would be the probable choice to head any newly-merged company, especially as the idea had also been floated that it might take up AV’s stock market listing in Sydney.

The need to find a CEO places a further obstacle in the talks for both sides to overcome.

AV has been at pains to stress to investors that it is sufficiently robust to thrive as an independent company and that it is recovering from the difficult experiences of the past few years.

It made a net profit of $A2.78 million in the first half of its current financial year, down from $A12.9 million a year earlier.

To fill the immediate gap left by Garvin’s sacking Australian Vintage has appointed Peter Perrin as acting CEO. He is an existing non-executive director of the group.

Perrin, the company says, “brings a wealth of high-level wine industry experience” in Australia, the US and New Zealand over the past 40 years.

Despite the crisis triggered by Garvin, chairman Davis thanked him for his achievements over the past four years.

Innovation

“These include steering the company through the challenges of the COVID-19 pandemic and the development and execution of the company’s five-year strategic plan, which transformed AVG into a consumer-led branded business with a commitment to innovation.”

Garvin’s annual pay was about $A1 million and as of last June he held 1.2 million shares and 1.29 million options.

After touching $A0.90 in June 2021, the shares stood at $A0.35 after the news of his dismissal broke.

Garvin’s accrued entitlements are to be paid and he will receive payment in lieu of his six-month notice, but the unvested performance rights he held as of last Friday will lapse.

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