Chief Strategy Officer / Australia
Choices that made the company smaller where it could not set terms
- Group revenue, year to June 2026
- A$502m
- 54 per cent Australia and New Zealand, 46 per cent exports
- EBITDA margin, FY2026
- 18.3%
- Up from 11.4 per cent in FY2023, before the Riverland sale
- Ceiling on any one export market
- 20%
- Share of export revenue, written into the board's risk appetite in 2024
Decisions & consequences
01Selling the Riverland business to the lower of two bidders
By 2023 our Riverland business near Loxton made 5.6 million of Tarrowin's 9.9 million cases, mostly commercial and cask wine and bulk sales. It produced A$176 million of revenue but only A$6 million of EBITDA, because warm-climate grape prices had collapsed and the country held far more red wine than it could sell. The winery needed A$38 million over five years for refrigeration, tank storage and wastewater treatment. It also bought fruit from 186 contracted growers, some of them my childhood neighbours.
I recommended selling, and the board agreed in May 2023. Two bids reached the final round. An inland winery group offered A$131 million, conditional on clearance by the ACCC, because the purchase would have made it the buyer of roughly a third of the region's contracted grapes. Brackenlea Beverage Partners, a privately owned drinks group with no winery in the region, offered A$117 million without that condition and agreed to honour every grower contract through the 2027 vintage.
Our chief financial officer argued for the higher bid: fourteen million dollars was real money, and the regulatory risk could be managed. I recommended Brackenlea. The ACCC had concluded in a 2019 study that growers in the warm inland regions had little bargaining power, and a review could have run through the 2024 vintage while staff left and growers waited. I also judged that our premium brands would carry the reputational cost if growers' terms worsened. The board chose Brackenlea, and the CFO's view was minuted.
The sale was signed in October 2023 and completed in February 2024. We recorded a A$19 million loss on sale, and revenue fell by A$176 million. EBITDA margin rose from 11.4 per cent in FY2023 to 18.3 per cent in FY2026, and the proceeds helped cut net debt from A$214 million to A$108 million. The growers' contracts were honoured, although 27 of the 186 have since left grape-growing because the oversupply has not eased.
Each business is now judged on contribution after the capital it will need. I would change two things. I would have planned the removal of A$9 million of central costs before signing, not over the eighteen months after. And I would have driven to Loxton to tell the growers myself on the day of the announcement, not a week later.
Making one exclusive label for our largest customer, and declining two
In late 2021 the larger of the two supermarket-owned liquor chains asked us to produce three wines under labels it would own. Together they came to 1.3 million cases a year, at shelf prices of about A$10, A$16 and A$24. Its buyers made clear that suppliers who helped would be treated as partners in the next range review.
The offer was attractive on volume. It would have filled capacity at two of our wineries and added roughly A$110 million of revenue a year. My analysis was less comfortable. The A$16 and A$24 wines would sit on the same shelf as our own Coonawarra cabernet and our Ostrey Range Barossa shiraz, made from similar fruit at prices a fifth lower, on terms the retailer could change each year. Our consumer panel showed that 40 per cent of our buyers at those prices already bought the chain's labels. We would have been funding a competitor with our own grapes.
I recommended accepting the A$10 wine, where we had no brand of our own and spare Riverland capacity, and declining the other two. Our domestic sales director disagreed. He warned that the chain would punish us in the range review and that another producer would make the wines anyway. He was right about both.
In the February 2023 review nine of our wines were removed from the chain's smaller stores, and our revenue with it fell A$17 million, or 11 per cent, in FY2023. Another producer took the A$16 and A$24 contracts. The A$10 label ran at about 610,000 cases a year and passed to Brackenlea, with the retailer's consent, when we sold the Riverland business. Our premium wines kept their price, our sales through independent retailers grew 9 per cent a year from FY2023 to FY2025, and by FY2025 our revenue with the chain was 4 per cent above its FY2022 level.
Every request for a retailer-owned label now goes to four executives with a shelf-economics paper, and we decide before each review which listings we would accept losing. I would do one thing differently. I let our decision reach the chain's buyers as a letter. I should have gone to their head of wine myself, with our data and an alternative, such as a regional release sold only through the chain for a season.
Capping a reopened export market at a fifth of exports
In FY2020 one Asian market earned Tarrowin A$124 million, 39 per cent of our export revenue and an even larger share of our profit, because it bought our most expensive Barossa reds. I had built much of that position as managing director for Asia. When the market imposed anti-dumping duties on Australian bottled wine from late 2020, our sales there fell to A$6 million within two years. We wrote down A$21 million of wine labelled for that market, and over the next three years we built sales in Korea, Japan, Singapore, Vietnam and Thailand from A$23 million to A$58 million.
The duties were removed in early 2024. Within weeks our former distributors asked for about 260,000 cases in the first year, worth roughly A$70 million. Our chief executive and our head of Asia wanted to accept most of it: the wine was available, the margins were the best in the company, and competitors were moving quickly.
I proposed a limit instead. No single export market would exceed 20 per cent of export revenue, and our scarcest wines would be allocated first to the markets that had kept buying from us. The cost was explicit. We would turn down about A$28 million of orders in FY2025, and one of our two former distributors would probably move to a competitor. It did. Our chair asked for both cases to be put to the board, which approved the limit in May 2024 and wrote it into the company's risk appetite statement.
By FY2026 the reopened market had grown to A$42 million, 18 per cent of export revenue, at an average price per case 14 per cent above FY2019, because we allocated wine rather than chased volume. The A$58 million we had built elsewhere in Asia held. Concentration is now a standing item at the Audit and Risk Committee, where I report twice a year.
I would make two changes. I would have proposed the limit in 2021, when nobody was asking for wine and the argument cost nothing; in 2024 it had to be won against live orders. And I would have included distributor credit exposure in the limit from the start. We added it only after one distributor's payments slowed in 2025.
Making retailer advertising prove its return before it received trade money
In late 2024 both supermarket-owned liquor chains asked suppliers to commit part of their trade budgets to their new advertising networks: personalised offers to loyalty members, sponsored positions in app search results, banners on their websites, screens in larger stores and campaigns on other websites using the chains' customer data. We spent about A$46 million a year on domestic trade investment, most of it on temporary price reductions and catalogue features. The chains offered priority placement in the main promotional periods to suppliers who committed early.
Our marketing director proposed moving A$12 million, about a quarter of the budget, in 2025. The retailers' reports were impressive, but they counted sales from any shopper who had seen an advertisement, including people who would have bought our wine anyway. I proposed a A$4 million test across five formats, judged on incremental gross profit against matched control stores and held-out groups of loyalty members, with our finance team agreeing the measures in advance.
One chain agreed to holdout testing for three formats. The other offered only its own attribution reports, so we spent just A$0.6 million with it. The trade-off was visible: for two quarters we lost our feature-partner position with the second chain, and our sales director estimated that it cost about A$3 million of revenue.
After nine months two formats, personalised loyalty offers and sponsored search placement, returned A$1.35 and A$1.20 of incremental gross profit per dollar, against A$0.85 for our average price promotion. The other three returned less than A$0.60. In FY2026 we moved A$7.5 million into the two formats that worked, reduced the depth of our price promotions and spent nothing on the rest. The second chain later agreed to a holdout design for loyalty offers.
Every new form of trade spend now needs an agreed control before money moves. I would change two things. The test ran across Christmas, when wine sales are distorted by gifting and large orders, and I would run it over a quieter quarter. And I would have shared our method with both chains' advertising teams at the start, instead of presenting it to them as a condition.