Australian Vintage Ltd. said it has ended its long-term lease of the Millewa vineyard as the company looks to reduce oversupply of red grapes and gain greater flexibility in sourcing strategies.
The company, one of Australia’s major wine producers, said in a statement that terminating the lease with Fresh Country Farm would support its inventory optimisation efforts and help curb losses stemming from declining sales and excess stock. The Millewa vineyard primarily grows red wine grape varieties.
“Our inventory position for the end of FY2025 is likely to be higher than the prior year’s balance,” the company said. “The higher inventory balance projection for FY2025 is a consequence of declining sales, too much wine intake, and inventory build for Poco Vino and Lemsecco.”
AVL is facing mounting pressure across its core business. In the first half of fiscal year 2025, the company reported underlying revenue of AUD 130 million, down AUD 6 million from the same period a year earlier. Underlying earnings before interest and tax (EBITS) dropped by AUD 2 million to AUD 6 million. Inventory rose 10% to AUD 190 million, highlighting the growing challenges in managing supply and demand.
The company attributed part of the inventory buildup to unsold stock of Poco Vino and Lemsecco, two recently launched products intended to drive growth.
Poco Vino was introduced as a disruptive brand targeting millennials and lapsed wine consumers, designed for casual weekday consumption. It features vibrant packaging and a modern bottle format. Lemsecco, launched earlier this fiscal year, is a lemon-flavored Prosecco-based cocktail.
China Market Provides Momentum
Despite broader headwinds, AVL said its performance in Asia—particularly China—was a bright spot in the first half.
“China and the rest of Asia represent a significant upside,” the company said in its financial report. “Strengthened relationships with COFCO and Oceanus are expected to help drive double-digit growth for the full year.”
AVL has worked with COFCO Wine & Wine, a subsidiary of China’s state-owned COFCO Group, for over a decade. COFCO distributes AVL’s McGuigan brand in China, which has gained significant visibility through years of branding and promotional investment.
Following the removal of China’s tariffs on Australian wine in 2024, McGuigan resumed normal sales in the market. Mr. Yang, a representative at COFCO responsible for the brand, said its accessible style has helped it stand out.
“McGuigan reflects a typical Australian style—semi-sweet, semi-dry, and easy to drink—which suits Chinese consumer preferences,” Yang said. “After the return of Australian wine to China, McGuigan not only resumed distribution through traditional wholesale channels but also expanded into new formats like membership warehouse stores, on-demand e-commerce, and discount supermarkets to adapt to the market’s value-conscious shift.”
Yang also highlighted the strength of the long-term partnership between COFCO and AVL.
“McGuigan is one of our most important brands,” he said. “It had almost no market presence when we started. Together with AVL, we built it from the ground up. That joint effort has created deep mutual trust.”
The brand’s resurgence shows that Australian wine’s recovery in China is not limited to marquee names like Penfolds. Smaller producers like Australian Vintage are also regaining momentum as access to the Chinese market improves.
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