Lark appoints Spirits Platform as domestic distributor, forecasts extra $3m revenue in FY24

Australian whisky distillery Lark Distillery (ASX: LRK) is gearing up to close FY24 with over $3 million in revenue and Spirits Platform as its domestic distribution partner in a five-year agreement. 

SP is an Australian Spirits Distributor, established in 2015 by the ex-Suntory Australia Management team. It is majority-owned by its management team, with minority shareholders Remy Cointreau and Zamora. 

Lark CEO Sash Sharma added, “We are delighted to announce that we have appointed Spirits Platform as our domestic Distribution Partner. Spirits Platform are Australia’s leading Independent Spirits Distributor, with an impressive and diversified portfolio covering a wide range of spirits and liqueurs. Importantly, they are the market leader in Ultra-Premium and above Single Malt Whisky in Australia and have a strong track record of building brands for long-term success in the Australian market.”

The change in its domestic sales model will improve Lark’s financial position (EBITDA and Cash) in FY25 through cost savings, including the review of seven internal sales roles and any associated restructuring.

Spirits Platform’s diversified portfolio covers a wide range of spirits and liqueurs, including the Remy Cointreau and Edrington brands. This includes the notable inclusion of Remy Martin (including Louis XIII), The Macallan, Highland Park, and Bruichladdich. Lark’s inclusion alongside these brands provides significant portfolio strength, neatly overlapping with Lark’s target customer and consumer base.

Spirits Platform CEO Ian Atherton added, “We are delighted that Lark has chosen Spirits Platform as their domestic Distributor Partner. As our exclusive Australian offerings, Lark will become a core brand in the Spirits Platform portfolio along with Forty Spotted Gin. It has been our long-term vision at SP to represent an iconic Australian brand with significant growth potential that complements our existing portfolio of premium international brands.”

He added, “As the leading independent spirits distributor in Australia, we are scaling up our business to achieve our 5-year vision of doubling revenue. We are expanding our head count by 17% to 81 this year to align with these growth plans, providing the opportunity to increase our coverage and service our customers more effectively and efficiently.”

The partnership is the result of a comprehensive internal review. It will see Lark move from a domestic sales model managed by its internal sales team to a Distributor Partner sales model. SP will represent Lark and Forty Spotted Gin in the domestic business-to-business channels from August 1, 2024, with Lark continuing to manage the domestic Hospitality, E-Commerce and Australian GTR channels internally.

For the June Quarter, Lark is forecasting its net sales revenue to be approximately $3.3 million. The initial sell-in for direct export sales to distributor partners in H2 FY24 under newly executed distribution agreements of $900k offset more than half the anticipated H2 FY24 shortfall in the legacy Chinese indirect export channel of $1.7 million. 

It forecasts strong growth in travel retail, with sales in this channel forecast to exceed $1 million in FY24 and strong e-commerce performance in the fourth quarter. However, continued softer trading conditions in the domestic market have impacted B2B sales. At the same time, hospitality venues have been affected by lower footfall, with Hobart’s ‘Dark Mofo’ festival—the annual arts and culture festival in Tasmania—not taking place in Q4 FY24.

Cash is forecast to be $2.2 to $2.6 million at 30 June 2024, with the final balance subject to receipt timing leading up to year end.