Australian spirit producer Randall Wine Group’s Seppeltsfield Wines has bought a stake in Lark Distilling Co, granting it access to its barrels.
Warren Randall’s Seppeltsfield Wines subsidiary is acquiring A$14.5m ($9.4m) in shares from Lark Distilling.
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Lark Distilling said it will use the raised capital to invest in its brand and facilities over the next two years as it looks to drive its export strategy growth.
The partnership sees Lark Distilling gain access to and get right of first refusal for barrels used by Seppeltsfield Wines for fortified Tawny, Tokay, Olorosso, Apera and Muscat liquids.
Lark Distilling said these barrels were “central” to its “portfolio offering and ongoing expansion strategy”.
The barrel deal lasts ten years, with an option to expand it by a further ten.
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By GlobalDataIn a statement, Lark Distilling CEO Sash Sharma said: “In providing security of access to some of the world’s highest quality barrels, the strategic partnership with Seppeltsfield creates further competitive advantage for Lark Distilling in an integral part of our whisky making process.
“The partnership also lays a solid foundation for Lark Distilling’s future portfolio and brand offerings”.
In addition to the A$14.5m share taken by Seppeltsfield Wines, Lark Distilling directors Domenic Panaccio and David Dearie are purchasing A$0.25m worth of shares each.
Lark Distilling is also offering a further A$6.5m in shares to institutional investors.
Of the expected A$21.5m in raised capital, A$5m will be used for upgrading the group’s Pontville plant, A$9m will be for branding and marketing, while A$7m will be reserved for working capital.
“Upweighted brand and marketing spend will see Lark Distilling investing ahead to enhance global appeal and build awareness, positioning us well for success in new markets and channels,” Sharma said.
“Additionally, we plan to enhance our cellar door experience in Hobart to better engage with our consumers and trade partners.”
Lark Distilling was founded in 1992 by Bill and Lyn Lark. It produces Australian single malt whiskies.
In Lark Distilling’s full year unaudited results ending 30 June, it reported revenue of A$14m, down from A$17.1m year on year. The group posted an EBITDA loss of A$2.8m for the year.
