Tahbilk has bottle for US expansion as dollar value falls
Victorian winemaker Tahbilk has reactivated its export growth strategy for the crucial US market as the dollar's recent retreat from parity has made sales to the region profitable for the first time in years.
Tahbilk, whose brands include its flagship Tahbilk range, Four Sisters and McPherson, is on the cusp of a new supply deal for a major retail chain in the US. In the world's fastest-growing market, China, the group believes its portfolio of mid-price wines will be protected from the worst of the recent austerity drive, which has punctured once booming sales for more luxury beverage brands.
Better margin 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 in 2011-12. Revenue for the year to June 30 was slightly weaker, down to $10.98 million from $13.18 million.
Tahbilk chief executive Alister Purbrick said the smaller revenue for 2013 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. Sometimes you have grape-grower contracts locked in when you don't need them," he said. "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 bought the vineyard and winemaker in 1925, said the falling Australian dollar had provided just enough impetus to reanimate the winemaker's expansion plans for the US.
"That weakening from $US1-$US1.05 to US90¢-95¢ 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 was about to sign a new supply deal for its McPherson brand with a major US retail chain.
Mr Purbrick said anti-extravagance policies in China, 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," he said. "I think it has hurt the French more."
Treasury Wine Estates, owners of Penfolds, recently warned that it had detected a slowdown in sales for premium and luxury wines in the face of austerity measures.
Paris-based Pernod Ricard, owner of Jacob's Creek, has also commented on the impact for its top-price beverages because of the new policies.
Mr Purbrick said it was Chinese drinkers aged 25-40 that were driving wine consumption in the nation as their tastes differed greatly from those of their parents. They were increasingly viewing wine as the beverage of choice for celebrations and social occasions.
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