When Jon Moramarco took over as Interim CEO of Vintage Wine Estates in January, two things were true: First, the company had "a number of great brands, award-winning wines, awesome vineyards, and top-tier tasting rooms as well as an excellent team of people," he said. But the company also had too much debt, inflation was surging and consumers were cutting back spending on discretionary items.
So the company raised prices on some brands as well as shipping charges for VWE's DtC business, restructured its freight agreements, and cut headcount by about 4% at the beginning of March.
The company also reduced its SKUs to about 2,000 from 4,000 thus far, with minimal impact on volume, and only a 2% impact on revenue. Moramarco expects to cut the number of SKUs in half again, "driven by the reduction of Parent SKUs from about 900 down to 500. Over the company’s 20-year history that included
many acquisitions, there had never been any culling of smaller insignificant inventories. The strategic
action creates greater operating efficiencies as you might imagine," which leads to greater profitability, he said.
The increase in interest rates which has affected business in general has led wholesalers to reduce their inventories to about 45 days supply from 60 days, Moramarco said.