Australian Vintage reappoints sacked CEO

The troubled fortunes of Australia’s third largest wine group, Australian Vintage (AV), have taken yet another surprising turn. Ron Emler reports.

Just six months after firing Craig Garvin as chief executive for what the company called “a lack of judgement …inconsistent with the values of the company and the high standards expected of its chief executive officer”, its recently reconstituted board has reappointed him.

He will rejoin the producer of the McGuigan, Tempus Two, Barossa Valley Wine Co and Nepenthe brands on Monday.

“Craig’s track record at AVG, his leadership style and deep understanding of our industry and our partners make him the right person to lead the company,” chairman James Williamson said.

He said Garvin’s reappointment “will help strengthen the company and take advantage of opportunities in Australia and international markets”.

Garvin’s sacking in May came when Australian Vintage was in the middle of merger discussions with the new owners of Accolade Wines, Australian Wine Holdco, which ditched negotiations with AV and bought out Pernod Ricard’s wine interests.

That came as AV faced serious trading difficulties because of Australia’s glut of wine, especially at the commodity end of the spectrum where most of its wines were priced.

It lost AU$93 million in its 2024 financial year, compared with making a profit of AU$4 million in 2022/23. The loss was a result of significant write-downs, including a AU$37.7m goodwill impairment and a AU$36.6m inventory write-down.

During the year to June 30, AV achieved a 1% increase in sales to AU$260.6m with underlying earnings up 25% to AU$13.2m.

Setting aside the one-off extraordinary charges, its net post-tax profit would have grown by 26% to $5.3m.

The company was also hit this year by the enforced retirement through ill-health of Peter Perrin as Garvin’s interim successor as CEO.

Subsequently the board drew up a revised business plan which targets free cash flow of +AU$20mand a return on capital employed of +8% by the end of its 2027 financial year.

It has already made significant changes. In July it cancelled its lease on the Balranald vineyard in the Riverina region of New South Wales. That accounted for more than a fifth of its annual harvest volume. It also sold its Lyndoch vineyard to Seppeltsfield.

These actions will “result in a reduction of tax losses and the associated deferred tax asset of AU$10m,” the company said at the time.

Williamson said that Garvin’s appointment, “after a difficult period for the company, highlights the board’s laser-like focus on restoring shareholder value.”

At AU$0.16, the shares have more than halved since April and have lost almost 80% of their value since spring 2022.

Garvin will have an annual salary of AU$600,000 plus a long-term incentive plan. His last reported annual remuneration in FY23 in salary and fees was AU$712,941.

Related news

New world, old vines: Yalumba at 175

How Penfolds' curiosity in California evolved into a full collection

Q&A: Benjamin Hasko on becoming a Master of Wine and Master Sommelier