Can you hear me? You can. Great. All right, let's start that again. Sorry. Welcome to Delegat's year-end result announcement today. I'm Murray Annabell, the Chief Executive Officer, and joining me today is Riki Maden, who is the Group Financial Controller and presently our Acting Chief Financial Officer. We'll start the results presentation, then we'll open up the floor for questions, and the session will last about an hour. In opening, it's good to be present here today for my first call as CEO. Having been with Delegat for 20 years, I am deeply passionate about the mission and the company values. My journey from CFO to CEO is driven by my commitment to the company's success and my belief in the potential to set new standards in our industry. Over the years, I've seen firsthand how our dedication to excellence has positioned us as a trusted name in the wine industry.
My vision aligns perfectly with our goal to build a leading global super-premium wine company. In the long term, I aspire to drive Delegat Group 's growth by expanding further on our global footprint, investing in innovative viticulture and winemaking teammates, and enhancing our brand's reputation. The key drivers to the result today and the outlook pertain to a price implementation process to support our category premiumization and value growth, managing the 2025 harvest to budget yield to obtain an efficient cost of goods going forward, and implementing a $1 retail price increase in respect to the U.S. tariff. We've been managing the distributor and retailer inventory reset, and importantly, going forward, aligning shipments to depletions, which will avoid timing issues for inventory build as experienced over the last four years post-COVID.
We've been really judicious with cost management, and we've leveraged strong operating cash flow from operations and repaid debt. We have reviewed and considered that our level of capital expenditure is going to be lowered over the next three years. In respect of the company's strategic goal, it remains the same, which is to establish Delegat as a leading global super-premium wine company. We remain focused on wine category premiumization and value growth, aligned to the long-term trend of super-premium wine consumption. Our goal is to establish Oyster Bay as New Zealand's leading global super-premium wine brand and invest in super-premium varietals such as Sauvignon Blanc, Pinot Gris, Chardonnay, and Pinot Noir. North America continues to remain our key focus. With over 50 million premium wine consumers, it is still the group's largest market and our most significant opportunity.
Underpinning the goal is those four success factors, which were the world-famous brands, which you have resonated with. We've created a strong, recognizable brand that resonates with consumers worldwide. We must continue to exploit the climatic advantage of our wines as cool climate, elegant, assertive wines with glorious fruit flavors and wine styles that are the most sought after in the world today. Oyster Bay is regarded as a category benchmark and has achieved must-stop and now must-promote positioning with key retailers around the world. I can confirm the group's strategic goal remains the same to establish Delegat as that leader. We've invested in high-quality vineyards, scientifically led, and wineries using cutting-edge winemaking techniques to ensure our products stand out in the premium market.
We've got large-scale viticulture production from over 3,400 hectares of prime New Zealand vineyards that produces premium grapes and provides us a competitive advantage and an efficient cost of goods. In distribution, we've identified and achieved success in all key international markets where there is demand for premium wines. We've purposely not competed in European markets like France, Spain, and Italy. We've established the distribution channels and partnerships to facilitate growth, partnering with the largest distributors or retailers, and establishing enduring, mutually rewarding relationships that have gone to our success. Looking to the year that we've been in, it's been pretty challenging as people, sorry, Riki, in recent memory marked by some global headwinds that have tested the resilience of the wine industry and the strength of Delegat's business model.
Despite these pressures, Delegat remains steadfast in its commitment to protecting brand equity, managing costs, and delivering sustainable value for shareholders. We've navigated a complex operating environment shaped by declining wine consumption globally, shifting lifestyle preferences, and emerging competition from alternative beverages. Inflationary pressures across freight, packaging, energy, and labor have compressed margins, while climate volatility and structural oversupply have added further complexity. Over the course of this year, we guided twice on global sales and profit, the latest being in April when we announced the following, the announcement of the U.S. 10% tariff. This would impact our U.S. sales as distributors review their positions and inventory holdings. That guidance forecast global case sales would be down 12% on last year at 3,182,000 cases and operating net profit in the range of $47 million - $50 million.
I'm very pleased to announce that sales were exactly in line with that forecast, with net profit 2% above the upper end of the guidance. There were many positives that have come through in the last six months. Case sales for the six months were 1,554,000, and they were down 136,000 cases on the previous year for the six months. As we had indicated in April, that was attributed to what would happen with the U.S. inventory reset. Our case products realization, our selling price, was effectively $10 or $5.20 higher, or 5% in the previous six months' period. We improved our EBIT, EBITDA, and net profit margins by 2%, and net profit per [case] was up 13% on a comparable six-month basis.
We improved the shortfall of net profit from 25% down at the interim to be down 14%, driven, as indicated earlier, by the higher cycling cost of goods from the 2024 vintage. We achieved significant cash from operations, which was a record for the company at $105.7 million, being an 86% increase on last year, and we used that to repay debt and strengthen the balance sheet. We'll discuss that in greater depth soon. We've executed decisive actions to align with evolving market conditions, ensuring we remain well positioned to deliver sustainable long-term growth and shareholder value. With that, we focused on creating value today through disciplined management and strategic execution. We implemented price increases in certain markets aligned with that premiumization strategy, delivering an overall increase of 2% against FY 2025.
When you get into the detail, price increases in our value markets, being U.K., Ireland, Australia, and New Zealand, range from between 4% - 5.5% in each market. We grew our global distribution footprint, winning new points of distribution throughout the year. We've leveraged our deep market knowledge and strong distributor relationships to navigate the tariff impacts, as well as delivering on cost savings. If we look at the industry, the alcohol beverage category, including wine, continues to experience both cyclical and structural shifts driven by a number of trends. For us as wine producers, this has real implications. It means we're operating in a market where demand is not growing. In fact, it's shrinking. What that means is we have to be more selective, more strategic, and more aligned with the real opportunities where they are.
It reinforces why we're placing such a strong emphasis on premiumization, brand strength, and supply discipline. We simply can't afford to grow supply into a market that isn't there. Consumers are drinking less, but they are seeking recognized quality brands when they do. Moderation continues, driven both by economic and lifestyle factors, as well as health and generational attitudes. Consumers are choosing fewer or lighter drinks. The generational shift is real. Baby boomers, who have historically driven wine consumption, are aging out of the market. Gen X and Millennials are drinking less wine, and Gen Z have shown very different preferences, often favoring low or no alcohol options or entirely different categories like spirits, RTDs, or even cannabis-infused beverages. Encouraging, though, we see in the last two quarters data that has shown Gen Z are now showing some signs of engaging with the category.
Premiumization has slowed as consumers continue to focus on their budgets and their necessities. Generally, white wine is forecast to perform better than any other wine category, aligning with long-term consumer trends for lighter, refreshing beverage choices to enjoy at home. New Zealand wine is particularly well placed to benefit from these trends through natural advantages, distinctive wine styles, and continuing to build premium value with engaged wine consumers. Let's go through market by market to give you an update. In the United Kingdom, Oyster Bay was the only wine in the top 10 over GBP 9, with the next highest wine brand at GBP 8.88. The average bottle price in the U.K. wine segment is around GBP 6.66. However, the New Zealand wine category enjoys a more favorable price position at GBP 8.11, with Oyster Bay leading at GBP 9.23. This price position is up 7.7% on the year previously.
The reduction in sales, as reported in this slide here, is a combination of both those price increases implemented at the start of the year and the impact of heavy competitor price discounting in the latter part of the year. Oyster Bay is amongst the top three rankings within their respective premium New Zealand category, supported by targeted promotional programming and strong national account relationships. In Ireland, the category grew 1% in volume and 1.7% in value. However, Oyster Bay did decline 9.9%. Why was that? It was attributed to one significant customer that took some time to accept the price increase that was implemented. Positive news is they have accepted that, and trading with them reflects now normal trading patterns. There was a period of time that their patterns of ordering slowed.
We've got great engagement with other key accounts, and they remain positive, and we're working to strengthen partnerships as we head into the 2026 year. The average wine segment price for Ireland is GBP 10, which is up 0.7% against the year before. New Zealand wine enjoys a more favorable position, with Oyster Bay leading at EUR 12.25. That position was up 3.9%. Canada, and within North America, it's controlled by liquor boards, and programming is often fixed nine to 12 months out. It's quite hard to influence and adjust for any opportunity to get additional slots. Ontario continues to outperform, and our trading relationship with the Liquor Control Board of Ontario is very strong, and we maintain pricing discipline in the face of discounting with other New Zealand brands. We continue to lobby the liquor board for access to private licensing channels.
In the United States, clearly, it's our largest market and the most significant opportunity for future growth. Oyster Bay remains a category-leading New Zealand wine brand with Sauvignon Blanc ranked amongst the top five white wines by value. Oyster Bay is the number two Sauvignon Blanc from New Zealand in the category. Our brand growth strategy is yielding strong results, with Pinot Grigio now ranked amongst the top 10 within the premium category varietal. Oyster Bay has a leading position across all varietals in the other import wine segment. Despite challenging market conditions, early indicators of resilience are emerging. Distribution continues to expand with notable wins, including new points of distribution in Albertson in California and Publix in Georgia, with new programming of the BVE programs with Costco.
Our recent engagement with the Southern Blasio Wines and Spirits Senior Leadership post the tariff announcements reaffirmed their support for our brand and our pricing strategy. They acknowledged the strength of Oyster Bay's performance in a difficult market and encouraged us to continue to explore new opportunities. They endorsed our decision to align shipments with market in-market demand, which helped reset the distributor inventory levels and improve forecasting accuracy. In respect of the U.S. wine market, we see this continuing to contract, with total category scan data down 5.8%. Oyster Bay scan data was actually flat, outperforming the broader market and achieving a great result overall. Obviously, on the 3rd of April , the U.S. administration announced a 10% import tariff. Since that announcement, management has been reviewing the potential implications for our business.
We had over 51 distributors across the U.S. that we needed to deal with in terms of the matter. As I said earlier, and as reported by our Chairman, passing the tariff on was a necessity in terms of preserving our profitability. That strategy of retail price increases has started being implemented from [8th of] July 2025. Oyster Bay remains a top performer across all varietals, and our Barossa Valley Estate wines are amongst the top five Australian premium reds in the market. Turning to Australia, New Zealand, China, and Asia Pacific, the premium wine category in Australia grew by 5% in volume. However, there were significant price increases that were not matched by our competitors, and Oyster Bay does continue to remain as the top selling white wine by value, and other varietals like Merlot, Chardonnay, and Pinot Gris perform strongly. Barossa Valley outperformed the premium Australian red category.
In New Zealand, pretty challenging at home, the wine market overall declined by 4.5%, and that was really driven by domestic wine, which was down 3%, but imported wine fell by nearly 6%. Despite this, we've secured new listings with Foodstuffs North Island and Moreworth, and we've launched a BVE new Rosé in Liquorland and other key wholesalers. In China, we grew 41% and have maintained our position as Oyster Bay being the top selling New Zealand wine brand by volume. This growth reflects challenging consumer habits, expanding distribution, a broader varietal range, and successful digital marketing. The Asia Pacific region continues to offer us long-term growth opportunities, especially in Southeast Asia. In respect of our sustainability and ESG integration, we continue to be committed to sustainability and responsible growth. This commitment is guided by our framework and our long-term climate goals.
Reducing carbon emissions remains a key priority for us. In 2025, our emissions intensity on a kilogram of CO2 equivalent per liter of wine reduced by 6% compared to the year before. In 2026, we plan to build on this progress by using lighter weight, local-sourced glass and improving operational efficiency. We continue to hold Toitū carbon certification and have updated its science-based targets to align with goals set for 2035. We are undertaking a comprehensive review of our packaging following the sustainable packaging guidelines, and we are working to eliminate low-density polyethylene waste and improve how we report recycling data. Water stewardship and biodiversity are important parts of our 2026 sustainability plan, and we are optimizing water use, planting native vegetation along waterways at our vineyard sites to support our long-term ecological health. Currently, 87% of our glass bottles are lightweight, weighing in at 390 g.
We will publish our second climate-related disclosure in September, which outlines these initiatives in more detail. Moving to the detailed results, I trust you have had an opportunity to review the results and the accompanying presentation that we are presenting today. Based on the previous slide, we sold 3,188,000 cases globally, which was exactly in line with our status guidance provided in April, with North America remaining our largest region. That was down 426,000 cases or 12% on the year before. As I said earlier, we saw that price increases were not matched by other New Zealand wine brands at the start of the year. Competitors were discounting heavily to move volumes and age vintages, and distributors and retailers began resetting their inventory levels. In some cases, inventory was reduced from 150 - 180 days down to around 90.
This inventory rebalancing contributed to a drop of around 290,000 cases in global sales at the half, and we had estimated at that time around 150,000 - 200,000 cases, or about 4% or 5% was affected by this reset. Early signs suggested that the U.S. distributors will work to return their inventory levels to pre-COVID norms, but that would take them another 18 months to achieve. Obviously, when the tariff announcement came out, we saw in the second half a situation where that 18 months of assumption around them returning to a more normal 60 - 90 days effectively came into an impact over sort of three or four months and a very quick impact on our sales delivery requirements. Our market reaction to the price increases in the first quarter stabilized, with retailers and consumers accepting the changes.
However, the tariff led to a significant inventory reset, as just mentioned, in terms of the U.S. shipments. While that reset was challenging, it does position us now well for 2026. We expect shipments and in-market depletions to be better aligned going forward. Currency movements didn't provide us a tailwind, especially with more favorable exchange rates from the British pound and the U.S. dollar. Some of the key highlights of this year's performance have been in this revenue line that you see here. New Zealand dollar, the sales revenue was $346 million, which is a 7% decrease on the year before. However, when you express that on a per case basis, revenue increased on a per case basis by 5.5% or $5.70 per case over the previous year.
Despite the 12% volume reduction, we were able to grow our value driver, mainly due to price increases of around about $2.60 in the markets we implemented them when compared to the total, the half of the revenue from FX. This slide, I guess, captures, as we coined it, a credible result in terms of the industry challenges. The next slide gives that movement in terms of profitability. At an operating EBITDA level, we've seen an improvement in our margins by selling fewer cases but at higher prices, which reflects our strategy of selling less but better. We manage costs effectively, keeping them below inflation levels. At the same time, we continue to invest in the brand and consumer advertising to strengthen awareness and affinity, and this helps increase the rate of sale per distribution point.
Currency clearly has had a positive impact, and year-on-year, that contributed an additional $8 million to EBITDA. In terms of profit, net profit after tax, in the first half of the year, we reported operating net profit of $28 million, which was based on 51% of our annual case volumes at that point in time. At that point as well, net profit was down at a 25% year-on-year for the six months. By the end of the year, we have reduced that shortfall to 14%, finishing with an $8.6 million decline compared to a $9.5 million at the half year. This was achieved through a focused performance in the second half. The group reduced costs by $2 million in the second half of the year. This was supported by debt repayments and lower OCR rates, which led to interest savings.
These savings helped offset the higher cost of sales that came from the 2024 vintage. As in previous meetings, we talk about the fair value adjustments. This year, the removal of the tax depreciation on commercial buildings resulted in that one-off non-cash adjustment. That adjustment did not affect this reported profit result. For operating profit at $51.1 million, after adjusting for these fair value items, reported profit was reduced by $2.1 million, resulting in a reported profit of $49 million. That is higher than the interim result for the first half of the year by $36.5 million. As discussed in previous meetings, we aim for fair value adjustments to remain as consistently as possible year-on-year to reduce volatility in earnings and avoid unnecessary distractions. This year, the 2025 vintage was in line with our budgeted yields, and there was no tax adjustment for the buildings.
As a result, the after-tax impact of fair value items was a $26.2 million improvement year-on-year. The key fair value components, as you know, are in the produce line. This year, the cost of growing our grapes was lower than the market value, which was a return to normal conditions. We believe that profits should be recognized when the wine is sold, not when the grapes are harvested. That is why, effectively, it comes through as this adjustment and is excluded from operating profit. Derivative instruments recorded a $6.6 million loss, and that was mainly in relation to interest rate swaps when compared to a $2.7 million gain in the previous year. In respect of the next chart, we give you that year-on-year improvement in respect of reported profit, highlighting the key changes of where fair value impacts on operating profit. Next slide is our total assets.
Remain around $1.1 billion, which is a 2% increase from the June 2024 levels and reasonably consistent with our 24 December position. The $18 million increase in assets is entirely due to ongoing capital expenditure on winery and vineyard developments. That growth was offset by reductions in working capital in other lines. Shareholders' equity increased to $586 million, net debt reduced by $31.5 million, and was then $17 million lower than the level recorded at December 2024. We have taken deliberate steps to continue to focus on collections, reduce costs, and scale back capital expenditure. That has all led to the results you see today. In the next slide, we give a waterfall in terms of our cash positions, in terms of our debt.
As of today, we have approximately $86 million in available headroom, which gives us strong flexibility to finance the business and deal with any other market shocks. We continue to operate well within our banking covenants, and we have strong support from the syndicate of lenders. Actually, following the U.S. tariff, we successfully resyndicated $420 million of our debt facilities, and this process included a full credit review of our short to medium-term cash flow projections, and we received very favorable backings from our existing banking partners. Over the last four years, we have invested more than $250 million in growth assets. This year, we reviewed our capital expenditure program, and we took the opportunity to divest non-strategic assets and rephase spending. Total expenditure for 2025 was $52 million, slightly below the $55 million we guided at February.
Our long-term investment in high-quality vineyards and winery infrastructure has put us in a strong position to reduce capital expenditure over the next three years while still maintaining operational efficiency and protecting margins. Due to the inventory reset in the U.S. and declining wine consumption, we have, at this point in time, moderated our sales growth expectations and scaled back some of our expansion plans. In FY 2026, we expect capital expenditure to be around half of what we have spent this year, around $26 million. It is important to continue to clarify our guidance on replacement versus capital growth expenditure. As I still note in some of the analyst broker reports, assumptions around capital expenditure may still be influenced by previous comments that we have made around what to expect in terms of replacement CapEx rather than growth CapEx. Our replacement or maintenance CapEx is relatively modest.
Since listing in 2006, we have invested nearly $870 million in CapEx, with only 8.5% or $74 million of that spent on maintenance CapEx. As a capital-intensive business with long-term life assets such as wineries, tanks, vineyard equipment, replacements are infrequent. As an example, equipment like harvesters and tractors typically last in an eight to 15-year period, and they are certainly not replaced annually. We estimate maintenance CapEx to be in the range of $5 million- $10 million in the light year and $10 million- $15 million in a heavier year. Like we gave last year, we said we would provide guidance around what we thought the following year's maintenance CapEx assumption looked like. For this year, we were at the low end, around $4 million, and we expect the next three years to remain definitely at that lower end of that range.
Many of our core assets have useful lives of 50 years or more and do not need frequent replacement. Last year, our reported ratios were significantly impacted, particularly in reported as a result of the fair value adjustments. It's good to see we've returned to achieve a return on capital of 9.1% in terms of operating and 8.6% in terms of reported profit. Those do include assets that are not EBIT accretive at this point because they're still in development. If we adjusted to those, our return on capital would be closer to 10.5%. The outlook for Delegat remains one of value growth, selling less but better, and our return on capital reflects effectively our investment in those assets to drive growth going forward.
In respect of the outlook, this does show, I guess, a more modest change from what you had seen before, and that reflects, I guess, all of the things that we've talked about before. We are guiding our forecast for an improvement in case sales in 2026 and returning to around 3.6 million in three years' time. On the back of that, we have, based on prevailing exchange rates, market conditions as known now, we are forecasting to achieve an operating net profit in the range of $50 million- $55 million. That concludes the formal part of the presentation. Riki and I would be happy to take any questions at this point.
Hey, morning guys. This is Guy here from the [Desjardins].
Hi Guy.
I'm off to kick off.
That's great.
Maybe just starting on some of the price increases you put through, can you just remind us some of the timing of those and how we might expect them to annualize into next year? Just as a bit of a follow-up, talk through, I mean, like there was, I guess, the discussion with one customer who certainly pushed back on some of the price increases, but maybe talk a little bit about the response you're seeing at the consumer end to those, particularly in the context of the tariffs.
Yeah, sure. The majority of the price increases were implemented 1 July, so they have, for all intents and purposes, been at least in for three long quarters. There were some that were staggered over that first quarter in terms of that. Those were in the markets the U.K., Ireland, Australia, New Zealand, and select provinces within Canada. We did not have any price increase in the U.S. As I said, I guess now our position in terms of the tariff is for a retail price increase to effectively offset the tariff impact, and that's been staged for 1 July of this year. In terms of the responses you said, by and large, often other brands look to Delegat and Oyster Bay to actually lead off these things. It's pretty challenging that we have to bear the bad news and others then fall in behind that.
That is, I guess, a reality when you're a number one, number two, three, you know, brand in the markets. Generally, whilst people, or certainly distributors and retailers, understood the dynamics, obviously there was a view around what the competitors are doing, and that's where we did see a dislocation again, where Oyster Bay went first and some have not still gone because they are still having to move 2023 vintages. However, you know, trading performance, based, I guess, on our guidance and our resets have said that based on the profile that we were seeing, that we've pretty much delivered against that. That one customer that was particularly challenging for probably three or four months has been consistently ordering for the last six months.
I guess it's that time to take for some to accept it reluctantly in some markets, but also in others going, we understand, and actually, this is actually driving the category up, which is not actually a bad thing.
Thanks for some color around that. The other thing I was keen to dig into a little bit is some of the movements in the gross profit margin. From memory, in the last year and year that's just been, you had some renegotiation on packaging and freight, which had offset some of the poorer harvest impact from, I guess, a COGS per case sort of view. Could you talk a little bit about how we should think about that into next year, particularly as the harvest has bounced back stronger?
Yeah, you're right, Guy. I guess we had signaled, and it remains still an element out of our control in terms of the freight and the shipping rates, but we do undertake annual tender renewals, which have been concluded. We're always on watch around how the shipping companies are reducing or changing their capacity to basically continue to hold up their pricing. We've looked at the other packaging costs, and a significant initiative which will deliver against 2026, rather than this year, as I outlined under the sustainability, is that we have moved to a domestic supply arrangement, which gives us some operational efficiencies. It does also, through that, give us some really significant locked-in glass prices for a couple of years, which is really great. I do expect that we were wanting to see a 2025 vintage more normal, like we use the language, and that was achieved.
That plus some other packaging costs, particularly in glass, will then result in us seeing some of that guidance around what you should think about in terms of cost of sales going forward. The one thing probably to call out on that is, you know, the vintage was very, it was large from a New Zealand perspective. It was the second largest on record. For some, it continues this very long inventory position that they've got, and that will be challenging around situations where people have got more inventory than they've got demand for. How we're thinking about that is, as a result of a 400,000 case reduction against what we were expecting, we're not immune now to that.
We are looking very carefully at the 2026 vintage and managing that to ensure that we balance inventory with demand, and that then may result in a more controlled vintage coming through in 2026 than we've seen this year.
Okay, great. No, that's some really helpful color. Maybe just one last one, just on those case sales guidance. If I look back over the last, I think maybe five years, and you're typically providing three years ahead, that outlook has steadily come down pretty much every year, and again, no exception this year. I mean, in part due to the harvest, but also the demand challenges you've called out. Could you maybe just talk a little bit around how you view the risks to those numbers and how some of the inputs from a demand perspective that you come to the forecast, right?
Yeah, look, we go market by market, and the market dynamics, I guess, there's some divergence in that. If we look at it, you look back now over the last three or four years in the U.S. shipments in terms of how that market wanted to de-risk supply chain pressures has probably led to a position where this gives an inventory reset going forward. From that perspective, we feel really comfortable that the underlying depletion is coming through in the market, be it that we were flat, but the market was going back 6%, continues to emphasize Oyster Bay being a leading super-premium brand in the U.S. Our support from our distributors saying, "Keep on doing what you're doing," gives us confidence around it.
However, you know, this tariff has been something challenging, and there will be others in different positions around how long they have been on terms of their inventory positions up into the States before the tariff was imposed. They may have been an advantage over someone like us, which was more balanced. We still remain confident around the opportunity in the U.S. Our big challenge at the moment, as we say, is trying to attract those new consumers in, but that's the biggest one to play in. From that perspective, I guess we continue to put all of our emphasis on that. It's not saying we abandon the other markets, but in the other markets, Oyster Bay has a commanding position. I guess what we'd like to do is pretty much fiercely defend our patch go. I think you can see that.
The U.K., whilst we went back, and on the face of it, a significant amount, our actual EBIT contribution to the group actually improved through those price increases. We've talked about that deliberately around, do we need to go for volume increase or do we need to go for value? Obviously, our position on the price increases that we've implemented, we're not going to take a position of putting further price increases at this point in time unless there's some surprises around having to recover costs that we're not expecting. Canada, again, it's pretty much influenced by the liquor boards and their positions around wine. Again, we're one of the favorites. I guess, anecdotally, with the Canadians taking a bit of a position that they won't buy U.S. at the moment, that is providing an opportunity for other strong brands to fill that space.
I suspect that window is going to be relatively short in terms of Canada coming back and reaching a deal with the U.S. We continue to look to Pinot Grigio, being really an opportunity for us to get some scale improvement in terms of our varietals. It was just unfortunate that the 2024 was very much influenced by the climate conditions, the floods, and we were very much inventory constrained because the vintage was down 50%. This one was a more normal, which is great. That does give us confidence around going and expanding and driving that varietal, which is one of the, again, fastest growing outside of Sauvignon Blanc. China and Asia are really important markets. I guess we've deliberately said we don't want to go and plant for China and get ahead of ourselves, but we do know the opportunity is enormous there. It is extremely profitable.
By Oyster Bay now becoming the number one brand, we are seeing others look to parallel import our brand in and try and actually compete against ourselves, which is a bit challenging. We have some high confidence around China, particularly, and the growth aspirations they've got there, but more importantly around continuing to drive the Asia markets and improve the positions we've got. U.K. always is a really big market for us, and we can move a lot of inventory through the support of Sainsbury's, Tesco, as we do with all the big and now Waitrose returning as one of the customers that have come back. We're really mindful around, do we do that at the decrement of brand positioning, and also does it actually deliver EBIT improvement?
Those are all the things that you would expect of us to continue to watch that if one market is potentially experiencing more challenges than we were expecting, can we pivot? Can we see another market sort of compensate for that? I guess that's the advantage we've got, that we haven't got all our eggs in one basket in one market. We have got a position of strength with Oyster Bay being across all of those markets, and it does de-risk to some extent situations you may be referring to around a customer that might take a while or consumers that might say, "Your price increases." You know, we're choosing to not purchase or look for someone else.
Great. Thank you. I'll pause there, but thanks for taking the questions.
It's fine. Guy, thanks very much for your support.
All right. Murray, it's Andrew Fergus here. I've got a couple of questions for you.
Hi, Andrew.
First up, you've got about 2,400 hectares of productive hectares, and you've said you've spent something like $870 million since 2006 on CapEx. How far through this expansion or how far through this trajectory are we in terms of the productive hectares? Obviously, it's increased a lot in the last 20 years. Where are we on that journey?
Yeah, so increased your 2,400 to 3 ,400. We've got 3,400 productive hectares here in New Zealand, and we've got a few hundred hectares across in the Barossa. Where we are at is, up till the last couple of years, we were still seeing significant demand, and Sauvignon Blanc continues to be a varietal that's growth, with the U.S. embracing that. The acquisitions of the vineyards and the plantings that we have in place were providing guidance beyond the window that you're looking at. I mean, we're saying it takes five years for us to reach what we could call full commercial production around a vineyard being planted today. The infrastructure we've got, and that whole 870 includes also two wineries, the biggest winery in New Zealand here in Marlborough, and then when we commissioned the Hawke's Bay Winery in 2015.
The board's position at them is that the infrastructure, the vineyards we've got, significantly exceeds the guidance we've given in these three years and takes us to growth beyond for the next 10 years.
Okay, thank you for that. The other question was around your managing of the harvest on fiscal 2026. Obviously, 2025 was a bumpy year, and you said you'd do something to manage the harvest in 2026. I understand you buy in a lot of grapes from contract growers. Will you simply moderate that side of it, or how do you see managing that?
Yeah, that's a good question. Clearly, grape grower supply has been and will remain an important supply element for the group. However, I guess in this environment, with the reset, the supply coming from growers is we're taking a position that we want to moderate that, but only under contractual arrangements. We will continue to take growers' fruit under the contracts we've got, but at this point in time, given the supply situation, if a contract was to come up for renewal, that probably wouldn't be renewed at this point. We're not alone on that. All other eight big wineries effectively have been in the same position. I know that's challenging for the grower community, right? Some of their contracts usually are long-term in terms of supply. Some are much shorter.
In terms of ours then, what we've said is we're looking at the ability to potentially put a vineyard to sleep, if you can loosely describe it like that, which then means you may limit the volumes coming through to achieve that balancing, but it takes out then a lot of the growing costs that you would normally have to put into it. Those are levers that we can employ to try and balance the supply with demand. We've been very successful, to be honest, at that. Over the 20 years that I've been here, it's been one of our key areas of supply and inventory management. I guess at the moment, in this environment where others are still moving their 2024 vintage and we're more balanced, we've released the 2025, Sauvignon Blanc was a shift in early July. Pinot Grigio got away in June.
It does make it harder in terms of trying to meet demand when others are heavily discounting.
Much appreciated. Thank you. With the expected harvest from fiscal 2025, by my calculations, it's going to be more wine produced than you'll be selling in the coming year, because you've guided, was it 3.2 million or 3.3 million cases? Obviously, there'll be a little bit of a stock build in this fiscal, I imagine.
Yeah, that's right, Andrew. Although, if you remember, the 2024 was very low. It was about 25% down on the year before. We talked about that, that again, in a year like that, sometimes you review your release dates, but you would like to think that the next year's vintage gives you the opportunity to potentially rebalance and have your carry forward. That's happened through this. We've taken a position that climate change has thrown a variability in the vintages. In a year where you go particularly light, the only thing you can do is go and buy that fruit or those grapes from somewhere else. Is it better to de-risk that and potentially carry a little bit more carry forwards in terms of Sauvignon Blanc?
We're not talking like years, we're talking a couple of months to potentially position us so that we can actually deal if the 2026 happened to come through more lighter than the year before.
That's great. Thank you very much.
Any other questions? That's perfect. I guess that gives us, we're virtually to time, which is brilliant. Thank you very much for your support and interest in our company. Have a good afternoon. If we're catching up with you, we'll catch up with you next week. Bye for now. Thanks very much.
Thanks, Ross.