Australian Vintage has reached an agreement to exit its Millewa Vineyard lease agreement with Fresh Country Farms.

Millewa Vineyard produces a majority of red varietals and the exit is expected to generate a relative net cash flow benefit of more than $8 million over the remaining three-year lease term, taking into account a $2 million exit fee and ongoing payments equivalent to the lease fees as part of the exit contract.

“It is a testament to the company’s strong partnership with Fresh Country Farms that we were able to work together to agree the terms of the exit,” Australian Vintage said.

The Millewa Vineyard currently yields between 10,000 and 12,000 tonnes of grapes, predominantly red varieties. Australian Vintage said exiting the Millewa Vineyard lease provided flexibility in its sourcing strategy and a key reduction of red varieties that are in excess of demand.

Australian Vintage announced in May that the company was entering “the early stages of a turnaround to address both declining sales and negative cash outflows of the Group in recent years”.

The company revised its financial forecast, projecting a $13 million cash outflow instead of breaking even as previously expected. It said the update reflected ongoing challenges in the wine industry, including global oversupply and falling demand.

Australian Vintage said it estimated FY26 would be a “transformational year” both in terms of turning declining sales into growth and generating free cash flow.

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