Lark Distillery fights back after profits tumble

Lark Distillery has revealed its FY23 net sales were down $3.3 million or 16% versus FY22 to $17 million as consumers pull back on discretionary spending.

Lark CEO Sash Sharma, who joined the distiller earlier this year, said: “While a challenging year for Lark in terms of headline financial results, the year-on-year performance was significantly impacted by one-off sales in FY22 and Q4 in particular.

“Adjusting for these one-off transactions, underlying net sales growth was 15%, underpinned by the organic performance of our core Signature and Symphony product ranges in FY23, with combined net sales growth of 53% and 49% respectively.”

Sharma, who started on May 1, previously announced cost-cutting measures and the termination of some research and development trials in the gin and RTD segments. His focus moving forward is on boosting international sales.

About 80 per cent of the group’s sales are in Australia and Sharma recently told the Australian Financial Review that he wanted to ramp up overseas sales.

“In late FY23 we took immediate actions to create and introduce a new integrated operating model within the business to build agility in the organisation by having clear ways of working, defined roles and responsibilities and allowing appropriate decision-making autonomy,” Sharma said.

“A restructure was also undertaken to right size the organisation and allow redeployment of resources in support of future growth areas, while decisions were made on obsolete dry goods and packaging to protect the brand as we look to develop Lark into an international brand.

“I am delighted to announce some progress towards our Asia expansion, with the appointment of an Asian Sales Director, Mr. Alfred Goh, as well as an exclusive distribution agreement (MOU) with Leung Heng in Malaysia.

“We are only at the start of Lark’s export journey, with more exclusive distribution agreements to follow, in addition to the planned expansion of our recently launched Global Travel Retail business. We are targeting growth from seeding the Lark brand in international markets from the second half of FY24.”

Sharma said whisky under maturation at 30 June 2023 had increased to 2.38 million litres, while the awards continued to roll in for the distillery.

“Importantly our unique core whisky products and Lark’s reputation for quality and craftsmanship were further strengthened [in FY23], as evidenced by our continued success in domestic and international awards; this included the Lark brand receiving 11 awards at the International Wine & Spirits Awards in London, and Lark Classic Cask being recognized as the Best Australian Whisky with Dan Murphy’s Decoded Award, solidifying Lark’s position as Australia’s No.1 Luxury Single Malt Whisky.”

Strategic road map for Lark Distillery

Sharma said the company looked forward to sharing its strategic road map, priorities and scorecard at our upcoming Investor Day in Hobart on October 17.

“We remain committed to building our brands, underpinned by our high-quality Whisky Bank, and setting up Lark to deliver long-term success, targeting sustainable growth both domestically and internationally, with a focus on creating and enhancing shareholder value,” he said.

Sharma (above) was an executive for 10 years with William Grant & Sons in Singapore, China and Britain before becoming CEO at Lark.

He joined Lark Distillery at a challenging time for the craft spirit industry, with the slowing economy curbing sales. Rising cost-of-living pressures and increases in interest rates have impacted the retail landscape.

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Categories: Business