The UK arm of Accolade Wines, the company behind the likes of Hardys, Echo Falls, Kumala and Lambrini, is to continue raising its prices as it bids to return to profit.
Australia’s second-largest wine producer, the business said it has been hit hard by the Covid-19 pandemic and Russia‘s invasion of Ukraine.
Newly-filed accounts with Companies House also reveal the Accolade Wines has conducted a review into how much it might receive if it sold a number of its brands in order to raise cash and cut costs.
The results, for the year to June 30, 2023, show the company’s turnover increased from £426.9m to £450.2m but that its pre-tax losses widened from £1.7m to £10.7m.
Its UK turnover increased from £777.7m to £381.2m while sales rose from £49.2m to £69m in the rest of the world.
During the year the average number of people employed by Accolade Wines in the UK fell from 557 to 399.
‘Black swan’ events
A statement signed off by the board said: “The company’s performance has been impacted by exogenous factors over the last three years including ‘black swan’ events such as the Covid-19 pandemic and the invasion of Ukraine, which have resulted in unprecedented ad material inflation of the company’s cost base particularly in relation to shipping and glass costs.”
Accolade Wines said price rises were introduced to offset some of the additional costs while further increases have been brought in during its current financial year.
On its losses, the company said they were “predominantly driven by an increase in cost of sales and net foreign exchange losses”, offset by a gain on divestments during 2023 of £7.2m.
Accolade Wines added that it has conducted a “detailed assessment” into the “recoverable amount of investments” in its subsidiaries following “lower than expected EBITDA results in its current financial year and “continued uncertainty on the macro-economic environment”.
The business said that it “anticipates growth in turnover, net revenue and normalised EBITDA” in 2024 through price rises and the impact of the Australia-UK new free trade agreement which came into effect on May 31, 2023.
Takeover
The financial results come after the firm’s parent company was taken by a consortium of investors led by US-based management consulting company, Bain & Co.
The deal saw Bain & Co agree to become the largest stakeholder in Accolade after agreeing to buy the company’s debt. Accolade Wines had been bought by Carlyle in 2018 for A$1bn.
Accolade Wines has owned the Lambrini brand since 2021 after it was created by the maker of Crabbie’s Ginger Beer and Dead Man’s Fingers, Halewood Artisanal Spirts.
In February, City A.M. reported that the London-based company had posted a turnover of £162.4m for the year to July 1, 2023, down from £371.4m.
Its headcount fell from 1,002 to 472 while it went from a pre-tax profit of £25.2m to a loss of £23.7m.