Moving on from former Managing Director Geoff Bainbridge’s drugs fiasco, whisky producer Lark Distilling Co (ASX: LRK) has finally settled the dust. Though its financials are not up to H1 FY22 levels, in FY23, it is gunning for growth with a renewed targeted marketing strategy and new CEO.
In the first half of FY23, Lark delivered $9.6 million in net sales, down 7% on H1 FY22. Plus, its Q2 FY23 sales were down 14% on Q2 FY22 but up 27% on Q1 FY23. The Company is counting on summer sales to boost profitability for Forty Spotted Gin, non-organic and opportunistic transactions in Q2 FY22 and elevated covid related e-commerce sales.
Christmas sales, long-term focus and a broader Core Lark portfolio have already helped Lark deliver organic net sales growth of over 18% for H1 FY23.
The Interim Managing Director and CEO, Laura McBain, said, “Lark continues to build brand awareness, create an expanded core product range and invest in our people while laying down award-winning whisky to support our ambitions. Lark is uniquely positioned to grow its export business with a strong whisky bank and the appointment of a new CEO with deep industry and Asia experience.”
McBain was appointed Interim CEO following Bainbridge’s ousting after a video of him doing illicit drugs at a party went public. The video was used to extort him, leading to him losing both his job and reputation. In November 2022, the Company found a new CEO, Satya Sharma, with expertise in Southeast Asia, to take over from May 1, 2023.
Lark aims to provide more targeted offerings. Its Rare and Limited Release program is performing well as the Lark Christmas Cask is sold out. Its core products, Classic Cask and Symphony, grew by 29% and 38% in H1 FY23, thanks to better marketing initiatives and increased distribution points. Independent retailers rose by 10% since September 2022 and 28% since June 2022.
The Company’s hospitality venues also raked in the money, with more than 100% growth driven by more people visiting Tasmania—up 43% from last year. Since all five venues are operational, compared to only two in H1 FY22, visitors get greater access to Lark.
Its online business has put up a shoddy performance compared to its in-person ventures. Net sales for e-commerce performance were $1.1 million lower than H1 FY22. Fewer people bought whisky online, opting to pick their bottles from physical retail stores.
Still, the Company’s profit margin in Q2 FY23 from channel shifts stands at 68.6%, up from 62.2% in Q2 FY22. Hospitality was the primary driver, with its gross profit margin for H1 FY23 being 68.2%, up from 61.8% in H1 FY22. For the quarter, cash outflows amounted to $350k and customer receipts totalled $7 million, up $900k on Q2 FY22.
Lark’s whisky under maturation strengthened to 2.2 million litres at 43% ABV (alcohol by volume), allowing it to serve more customers. Throughout H1 FY23, the Company exported its whisky to China and started trading in Singapore, Thailand and Vietnam. Lark is confident in future export opportunities as it seeks to grow its client base.
Alinda is a Business Reporter for The Sentiment
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