If anyone has access to updated broker reports would be good to read their take on results and the webinar.
Some key take aways from the call.
1. CEO announcement this week - an experienced spirts person (sounds like someone from one of the big liquor houses) with asia and south east asia experience! SOunds good to me, and we retain Dearie as Cahir with USA and americas contacts galore. (there was speculation Dearie woudl take on CEO role, but this is not the case, and this is good as we have broader experience set).
2. Still taking a steady approach on Exports, They don't think they have their ranging right. I completely agree with this, particularly into China. Early broker reports (circa 2020) refer to range expansion for export (they even had names, AX8 - this was obviously from the company and this seems like a china focused product, 8 is a lucky number in China) - obviously their range isn't complete yet. They said they would update this soon, this will be once new CEO is on board and they can all land on range and execution strategy for export...
3. Exports into China have been primarily in rare and legacy releases, with a small amount of classic cask. This is Good for margins on export (Dearie talked passionately about this, that often export is of the premium/luxury product and can actually be margin accretive overall despite the additional sharing of margin to get it to and into the export market).. This is an important point, Dearie was they guy at TWE that was axed for writing off all their cheap commercial wine in the USA so they could reset and focus on Premium. IT was that decision that has set TWE for longer term success, hard decision, setup the strategy before you grow.
4. Mgmt understands the need for age statements in some markets, this will take time as it takes time to age, but currently, they are laying down a lot of whisky so longer term they will have that available. I think they should acquire older dated whisky to fill this gap, buy another distillery. with stock. I doubt they will get the deal they got with Pontville again (i.e. buying inventory so cheap, particularly if it is older)...
5. Mgmt understands the value of cellar door, and highlighted the hundreds of millions being invested by the majors in experiences (as well as the majors buying smaller distilleries to buy "Heritage" locations to expand their reach and grip on that space.
6. DTC and gifts were down, reasoning was COVID, this makes sense. Hospitality is up though so thats the offset and probably why the margin was so strong vs PCP (despite margin in DTC and Gits being good, Gross Margin will be better in Hospitality, but comes at a servicing cost. i.e. staffing)... But, should drive higher sales per customer..
8. Dark lark release was 5,000 bottles and largest release yet, and sold out at $250 a bottle. thats $1.25m of sales (well net sales ex GST this would be $210 a bottle. so would be $1.05m).. What is crazy is this is only 2,500 litres.... 0.1% of their inventory... And a cheaper product line. Shows that their innovation and on the edge thinking creates value. What a great campaign.
7. Very aggressive and early Christmas marketing this year should drive a strong Dec quarter - I would like to know how many bottles of Christmas cask they have planned... More than the Dark Lark.... ?
GLTAH.
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(20min delay)