Dollar dip puts Tahbilk on US course
Tahbilk, whose brands include its flagship Tahbilk range, Four Sisters and McPherson, is on the cusp of a new supply deal for a retail chain in the United States.
In the world’s fastest-growing market, China, the group believes its portfolio of midpriced wines will be protected from the worst of the recent austerity drive, which has punctured once booming sales for more luxury beverage brands.
Better margins on its sales, a weaker dollar and the absence of an overhang of commercial bulk wine gathering dust at its warehouses has helped Tahbilk boost its fiscal 2013 full-year profit to $212,376, up from $51,168 the previous year. Revenue for the year to June 30 was weaker, down to $10.98 million from $13.18 million.
Tahbilk chief executive Alister Purbrick said the smaller revenue for this year was primarily driven by the lack of excess bulk wine on its books that needed to be cleared through its sales channel.
‘‘We had been struggling with excess bulk wine stocks, which we had to sell as best we can,’’ he said. ‘‘Sometimes you have grape-grower contracts locked in when you don’t need them.
‘‘It’s taken a few years to get that under control, but in 2012-13 we didn’t have unprofitable bulk sales to be made – and this had a positive effect on our margin.’’
Mr Purbrick, whose family purchased the vineyard and winemaker in 1925, said the falling dollar had provided just enough impetus to reignite its expansion plans for the US.
‘‘That weakening from $US1-$US1.05 to US90¢-US95¢ might not sound much but has made a big difference to us – it has meant we have been able to get on the front foot in America again,’’ he said.
‘‘So we are starting to drive sales now, whereas we were in a holding pattern before because we couldn’t make margin out of it. Now we can make a bit of profit out of it – and if it went down to US85¢ we’d be absolutely ecstatic.’’
The winemaker is about to sign a new supply deal for its McPherson brand with a US retail chain.
Mr Purbrick said China’s policies of anti-extravagance sparked by the new government had not squeezed wine sales at the mid-priced bracket.
‘‘Certainly from our perspective there hasn’t really been a big or negative impact from that austerity drive,’’ he said. ‘‘I think it has hurt the French more.’’
Frequently Asked Questions about this Article…
Tahbilk is reactivating its export growth strategy for the US market because the recent dip in the Australian dollar has made sales to the region profitable for the first time in years.
Tahbilk is reactivating its export growth strategy for the US market because the recent dip in the Australian dollar has made sales to the region profitable for the first time in years.
The weaker Australian dollar has positively impacted Tahbilk's business by allowing them to make a profit from US sales, which was not possible when the dollar was stronger.
The weaker Australian dollar has allowed Tahbilk to boost its profit margins and reignite its expansion plans in the US, making it possible to drive sales and achieve profitability in the region.
Tahbilk's portfolio includes its flagship Tahbilk range, as well as the Four Sisters and McPherson brands.
In fiscal 2013, Tahbilk's full-year profit increased to $212,376, up from $51,168 the previous year, despite a decrease in revenue to $10.98 million from $13.18 million.
The new supply deal Tahbilk is about to sign in the US is significant because it marks a renewed effort to expand in the US market, driven by the favorable exchange rate.
Tahbilk struggled with excess bulk wine stocks, which they had to sell at less profitable rates. However, they have since managed to control this issue, positively impacting their profit margins.
Tahbilk boosted its fiscal 2013 full-year profit by achieving better margins on sales, benefiting from a weaker dollar, and eliminating the overhang of excess bulk wine.
The new supply deal for Tahbilk's McPherson brand with a US retail chain signifies a strategic move to capitalize on the profitable conditions created by the weaker Australian dollar, further expanding their presence in the US market.
Tahbilk faced challenges with excess bulk wine stocks, which they had to sell at less profitable rates. This issue was resolved by reducing unprofitable bulk sales, improving their margins.
Tahbilk's mid-priced wine sales have not been significantly impacted by China's austerity drive, which has affected more luxury beverage brands, particularly those from France.
China's austerity drive has not significantly impacted Tahbilk's wine sales in the mid-priced bracket, as their portfolio is somewhat insulated from the policies targeting luxury brands.
The exchange rate plays a crucial role in Tahbilk's US market strategy, as the weakening of the Australian dollar from $US1-$US1.05 to US90¢-US95¢ has enabled the company to make a profit and actively pursue sales in the US.
The exchange rate plays a crucial role in Tahbilk's US market strategy, as a weaker Australian dollar makes it feasible for them to profit from US sales, encouraging expansion efforts.
If the Australian dollar weakens further to US85¢, Tahbilk expects to be 'absolutely ecstatic,' as it would further enhance their profitability and ability to drive sales in the US market.
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