Interview – Cameron

AUSTRALIAN VINTAGE A Good Year

Australian Vintage is on a roll. Last month it announced record results with profits up by 79 per cent. Despite being less than 30-years-old, it has become a major force in the global wine market and one of only two publicly listed wine companies in Australia. We talk to Cameron Ferguson, who was recently promoted to Chief Operating Officer for Australasia and North America, about why this is just the beginning of the journey

Drinks Trade: How would you sum up the past 12 months for Australian Vintage’s (AVL) performance in Australia and in export markets?

Cameron Ferguson: The business has had a phenomenal year both domestically and internationally, successfully growing our global footprint and strengthening our position at home. Australian Vintage has been on an ambitious journey, transforming from a bulk wine producer to a quality branded business with an enviable collection of high-performing well loved brands. We are in great shape having just posted profits of $7.7 million, up 79 per cent on the previous year. Most pleasing of all, our cash flow is the highest it’s been since the merger between Brian McGuigan Wines and Simeon Wines, which created Australian Vintage as we know it today. Having such positive numbers puts us in an excellent position to increase investment back into the business and our brands. This year our three core brands – McGuigan Wines, Tempus Two and Nepenthe grew by 14 per cent globally. We are also investing more into the next wave of our ‘Bring a McGuigan’ advertising campaign, which is back this month for an extended 12-week run, reaching 3.6 million consumers across Australia. In China, our three year compound annual growth rate is impressive and, for a late entrant into the region, I’m extremely pleased with the progress we are making and the partnerships we’re building. The right strategic building blocks are now in place to give us a long-term, sustainable business with credible distribution across the market.

DT: What challenges do you see in the Australian wine retailing market?

CF: Consumers want new experiences, and wine is no different. People want to try new varietals and styles as well as having the established wines that put Australia on the map. As a company, we have taken some brave decisions in terms of new vineyard plantings and selecting which grapes we believe will be making waves five-to-ten years after we’ve put them in the ground. It’s a gamble, and not always easy to predict, but we’ve had some great success with Malbec and Tempranillo and to a lesser extent Montepulciano and Gruner Veltliner. European varietals are really coming to the fore, but with an Australian twist, and I find that very exciting for consumers and how wine companies like ours can really take drinkers on a journey. Restaurant wine lists demonstrate the evolution happening in terms of consumers’ changing tastes and this trend is certain to filter down to the retail space, which will influence the wine styles and product mix on shelves in the future.

DT: Which of your brands have you had the most success with this year?

CF: We have spent a great deal of time developing our product mix, working through the portfolio strategy and responding to challenging conditions in what is a very competitive market. McGuigan Black Label remains our biggest selling range, but we took the strategic decision to pull away from deep discounting to protect its long-term viability. In the end, if we don’t respect our brands, no one else will. As a result, our growth has slowed slightly in the short-term as the impact of that price realisation has come through. However, we have found our customers incredibly supportive and it has strengthened our relationships across the board, opening new opportunities as we looked for new growth opportunities. The move has accelerated the development of our retailer exclusive sub-labels under McGuigan together with renewed focus and investment across Tempus Two and Nepenthe which are growing at 38 per cent and 15 per cent respectively across Australia.

DT: For several years now, a key differentiator for Australian Vintage has been the ability to be nimble and turn around NPD quickly. How has that helped your relationship with the trade and the subsequent brand performance?

CF: As a business we put a big emphasis on true customer partnerships and to be as flexible as possible, which can be challenging when you’re handling an agricultural product that takes time to cultivate and mature. However, part of the benefits to being in a large group is that we can access fruit from different sites, and where we don’t own vineyards, draw on long-standing, valued grower relationships to buy grapes not accessible on the open market. That gives us an edge in terms of our NPD pipeline and, coupled with the business’ global outlook, enables us to spot trends and blaze a bit of a trail. Tempus Two is a great example of how we are injecting fresh energy into the sector, helping to carve out a unique niche as a contemporary, edgy brand, which is showing unbelievable growth.

DT: How has Australian Vintage (AVL) invested across the business and is there an area that is showing the greatest growth and potential?

CF: As well as increasing investment behind our brands to grow consumers awareness, we are putting a great deal of focus in our internal efficiencies and invested a record $19 million this year – which marks the largest ever capital investment in the business. The aim has been to drive efficiencies, enabling us to remain highly competitive and responsive to customers’ needs. We have significantly upgraded our packaging and bottling facilities as well as investing behind solar power and other sustainable initiatives.

DT: Australian Vintage has long been a flag bearer for Australian wine internationally, particularly in markets such as the UK. How are those markets performing?

CF: I’m really proud of the reputation our wines have gathered globally and the numerous high-profile awards we win speak for themselves. They help to strengthen not only the reputation of our brands but also the regions we represent. So, when Nepenthe wins a trophy at an international wine show, we are contributing to the success of the Adelaide Hills and growing awareness, which is incredibly important to us. The UK remains our biggest export market and we are seeing unprecedented growth there. Following the Brexit vote, several of our competitors retreated from the market, but we took the opposite approach, increasing our investment and spending more behind our brands and growing the team. It was a brave decision, but it’s paid off with McGuigan sales up 18% to become the UK’s third biggest global wine brand. It’s a phenomenal result that demonstrates our strategy to build exports in a sustainable way with our eye firmly on the long-term picture rather than quick wins. Sales to North America are up 31%, with Canada growing particularly well, where we have just signed a new 10-year contract with our supplier to fuel our ambitions for McGuigan and Tempus Two. Our result in Asia is in-line with our expectations and we have an extremely solid partnerships with Cofco and Vintage China. Over the last three years, our compounded annual rate of growth was 25%, which is a solid performance, especially when you consider we have only been in the market for ten years. We are under no illusion that Asia will take time to build.

DT: What is your goal and ambitions for Australian Vintage in the short to medium term?

CF: We are very single-minded as a business with several key strategies under-pinning all our activity. Crucial to our ongoing success is growing exports further as well as pushing our branded sales and developing new products. We are committed to growing Tempus Two considerably further and see huge potential for it in Australia and globally. Nepenthe is growing its footprint beyond its South Australian heartland and the launch of the super-premium Apex range last month adds another layer of depth at the top end of the market. drinks trade|29