Lark Distilling Co (ASX:LRK) is a whisky distillery based in Hobart, Australia. The business’ heritage goes back to the 1990’s when Bill Lark (widely considered the father of Australian whisky) began producing Australian single malt whisky, which was released commercially in 1998. Lark currently operates under the Lark, Nant and Forty Spotted Gin brands.
The company underwent a ‘major board brawl’ in May 2019, which resulted in a clearing out of the board including founder Bill Lark and the acting CEO. Since then, David Dearie (ex-CEO of Treasury Wine Estates) has come on as Chairman, Geoff Bainbridge (founder of Grill’d and ex-MD of spirits division at Fosters) has come on as CEO and in May 2020, Laura Bainbridge (ex-CEO of Bellamy’s) came onto the Board as a director. Bill Lark has since returned to the business as a brand ambassador.
The new management have big plans to turn Lark into ‘the Penfolds of Australian whisky’ by embracing the 28-year heritage as the nation’s first craft whisky and ultimately leverage its brand with Asian consumers.
At it’s current share price of $1.39 (September 2020), Lark has a market cap of ~$75m. It has ~$14.5m of cash after recently raising $9m from institutional investors including Ellerston and Regal Funds Management at $1.10, and $5m of debt.
Lark undertook its first ever national advertising campaign for Lark Whisky during FY20, which drove a 34% increase in sales. Lark generated revenue of $7m in FY20 and is guiding for revenue of $12m in FY21 after experiencing strong online demand during the COVID-19 lockdown. It also implemented a direct distribution model (ceasing its mainland distribution agreement). Lark generated gross margins in FY20 of 54% and an overall net loss of $1.3m. Cash flows from operations were ($3.5m) as Lark invested in building up its inventory.
Lark's current strategy is two-fold: (1) build and laydown inventory which will provide sustainable future revenues and profits, and (2) investing in building the Lark brand into a globally recognised and loved Tasmanian whisky icon.
The business currently has approximately 700k litres of whisky under maturation with a market value of just under $100m. Lark is aiming to double this to 1.5m litres by FY22.
The CEO has indicated that they are looking to recommence sales overseas in 2021 and 2022.
