26 Aug 2013

Delegat's toast North American sales

7:06 pm on 26 August 2013

North American sales are behind a 5% annual sales increase for wine maker Delegat's Group.

It sold 1.95 million cases of wine in the 12 months ended June but those going to North America jumped 25%. By contrast, its volumes to Britain, Europe, Australia and New Zealand fell 3%.

Managing director Jim Delegat said his company sold only 604,000 cases in Britain in Europe in the latest year, compared with nearly one million in 2010.

"We've just had a full year of price increases so we're very pleased with that but we've made the deliberate decision to ensure that we manage brand health and retain quality of distribution, as opposed to volume," Mr Delegat said.

"So we're pretty happy with the profitability out of the UK now given the price increases, so it's been a value growth market rather than a growth market."

In Australia, the economy was suffering "quite significantly" and retailers were putting pressure on suppliers to reduce prices.

"We feel that we want to protect our price position so, given the soft economy in Australia, we'd prefer to forego volumes, which we can pick up in the US."

The company's annual profit jumped 62%, boosted by one-offs, but its underlying result rose a more modest 3%. Net profit was $41.2 million - compared with $25.4 million the previous year - and underlying profit was $26.3 million.

The one-offs included the near $2 million cost associated with buying the Barossa Valley Estate for $28.6 million, which was completed in June, and a jump in the value of its vineyards and inventory of grapes.