Lark targets Australian growth before going global
While Lark Distilling Co is delighted and honoured by its IWSC nomination as a Worldwide Whisky Producer, CEO Geoff Bainbridge has told The Shout that the immediate focus for the company is Australia.
The new ownership team at Lark has revealed its intention to make Lark ‘the Penfolds of Australian whisky’, and Bainbridge told The Shout this is the company’s elevator pitch to explain succinctly what it’s trying to do and local success is key to making it happen.
“My strategy for calendar 2020 was to own Tasmania, then 2021 own Australia and 2022 explore internationals. Part of own Tasmania was that if you flew down to Tassie, where you looked, where to tasted, where you touched you would come across Lark.
“So that’s upgrading the cellar door, improving out distribution throughout all outlets and then doing some advertising in Tassie so you wouldn’t strain to find Lark or to see Lark.
“Then you head back to the mainland and say ‘I tried Lark down there, I loved it and now I’ve found in my local bottleshop and my local whisky bar. So 2021 for us is all about own Australia.”
Bainbridge admitted, what we all know, that this year has been challenging and so has challenged his timetable.
He told The Shout: “We’re a little bit behind because COVID has impacted our ability to physically get out and about, but it’s not stopping us, it’s slowing us.”
And if it is slowing the company, then it’s hard to comprehend just how well it would have been doing without COVID. The company recently reported first quarter net sales growth year on year of 78 per cent to $2.28m, while its total value of whisky under maturation at 30 September 2020 is $107m.
“We’re having tremendous success online,” Bainbridge told The Shout. “We took back distribution from Proof & Co and put our own team in place.
“The business is growing strongly. It’s strange because there’s no question off-premise has driven sales, but on-premise is bouncing back quickly. As tragic as things are in Victoria you have to look at four states and two territories are fine.
“It’s hurt us hard because our previous distributor was based in Victoria and the fact is where your distribute base is, is where you are at your strongest and that’s certainly caused us challenges, but despite that it’s great to see that year on year growth.”
What that growth also means is that Lark is now making a profit, and the company has confidence in looking to the future now after raising close to $9 million in a recent share capital raising scheme.
Bainbridge said: “This will be the first year we’ll make a profit. So we’re a 28-year-old loss making start-up and our 29th year will be our first in profit. So that’s a huge achievement for us.”
He added: “Thinking more about the corporate side of the business, and less so the whisky-making side. It’s really uncomfortable to be running your business with only a year’s worth of runway, in terms of cash.
“So I wanted to be a lot more comfortable by getting closer to the two-two-and-a-half year runway, which we are now with that capital raise. It means that we can execute our plans and stay focused. Every plan always gets interrupted and disrupted, ie: COVID, so this gives us the buffer for any interruptions in a pretty disruptive world.”
Bruce Mathieson came on-board as a new shareholder through the scheme, which will help Lark with its pub distribution in the future, and the scheme has proven successful. The raise was done at $1.10, with the share price at $1.10, and it is rare to do a raise with no discount at the moment.
Bainbridge said: “We came out of trading at $1.10 and then jumped to $1.35 so the existing shareholders are happy and management is happy because we have got cash in the bank.
“My plan now is to get us out of the equity raising cycle and move us into the debt cycle and you so just need enough breathing room. This next year will be where we are making enough money to cover the interest and therefore we’ll be in the debt cycle.”
Looking ahead for the business, Bainbridge outlined that with the business past the talking strategy phase, it’s now all about execution.
“We’ve still got such a job to do to make people aware of us and trial us. So awareness and trial is 100 per cent our focus over the next 12 months. It’s about respectfully building on Bill’s reputation and legacy and the overall Lark brand.
“We see that we have a role to play in Tassie whisky and helping bring Tassie whisky as a complete category up, not just ourselves and there’s some initiatives we’re doing to help other brands that we want to take to market as a group.
“So it’s a combination of awareness and trial, and we want to be able to look back and say that we enhanced the reputation and Lark and also we want to be able to look like we’ve been a good corporate citizen in Tassie whisky.”
Lark is one of only four global nominees who are in the running to take out the IWSC Worldwide Whiskey Producer of the Year, with the winner announced in London via livestream on 18 November 2020.