News

8 Apr, 2020
Supermarkets to enjoy $9b sales boost as shoppers eat more at home
Financial Review

After a bumper March quarter fuelled by panic hoarding, sales growth at Coles and Woolworths is expected to remain elevated for more than a year as consumers eat more at home.

Analysts say the coronavirus pandemic is likely to have a long-lasting impact on consumer shopping patterns. Even when pantry stuffing eases and stage-3 restrictions are lifted, cautious consumers are likely to cook more at home, order more online and keep their pantries better stocked.

Woolworths and Coles, and to a lesser extent Metcash's IGA retailers, will be the major beneficiaries of these trends, taking market share from the cafe and restaurant sector and doubling the size of their online businesses.

Evan and Partners analyst Phil Kimber estimates that about $8.8 billion in sales from the $47 billion cafe, restaurants and takeaway food service sector will shift to the $114 billion supermarket and grocery sector.

This will boost supermarket and grocery sales growth by at least 1.9 per cent in 2021, if 25 per cent of cafes, restaurant and takeaway sales shift to the supermarket channel, and by 3.9 per cent if 50 per cent of sales switch to supermarkets.

In March alone, Mr Kimber believes underlying supermarket sales rose 40 per cent (up from 4.5 per cent in January and February) due to pantry filling and another 5 per cent from channel switch. This could boost March quarter sales by 20 per cent.

While the initial panic hoarding is starting to moderate "it is becoming evident that retailers’ sales remain very strong as lockdown / social distancing measures [are] driving a material shift from out-of-home consumption to in-home consumption," he said.

"We expect grocery players will continue to benefit from the shift from out-of-home consumption to in-home consumption over the remainder of 2020 and well into 2021 (due to lockdowns and health concerns)."

On Monday, the major grocery chains started controlling the number of customers entering and exiting stores to help shoppers practise social distancing in the run up to Easter.

Coles, which owns Liquorland, Vintage Cellars and First Choice, and Woolworths, which owns Dan Murphy's and BWS, and wholesaler Metcash are also set to take market share in the packaged liquor market, even when hotels and bars reopen.

Mr Kimber estimated a 35 per cent switch from on-premise liquor would add about 8 per cent to liquor store sales.

"Whilst liquor is more discretionary than food so switching from out-of-home to in-home consumption will probably be lower, the respective size difference means liquor retailer (and thus liquor wholesaler) sales are likely to be more positively impacted by channel shift in percentage terms," he said.

Macquarie analysts believe consumers are likely to keep their pantries better stocked in future after experiencing shortages of essentials such as toilet paper, tissues, pasta, and rice in recent weeks.

"Holding more product at home is likely to be a key change with destocking by consumers post-crisis unlikely, in our view," they said.

"The average household held approximately one week’s worth of food 30 years ago; however, this had fallen sharply over the past few decades. The stock shortages in supermarkets over the past few weeks are likely to be remembered for some time."

Impact on profits uncertain

The impact of the shift in consumer shopping habits on supermarket profits is more difficult to estimate.

Analysts believe Coles and Woolworths' gross margins are likely to fatten as the market becomes more rational, with fewer promotions and less deflation as prices rise due to cost of goods increases.

However, operating costs will also rise as retailers employ more staff in-store, including security guards and cleaners, in distribution centres and online to meet demand.

"We see the material benefit to top line continuing past this year, however, increased labour, a shift to online, and higher stock movements are likely to partially offset revenue growth," Macquarie analysts said.

Margins will also be diluted slightly by the shift to less-profitable online retailing.

Online shopping accounted for about 4 per cent of grocery sales before the pandemic but reached about 9 per cent before both Woolworths and Coles were forced to suspend online orders for all but vulnerable shoppers to stabilise stock levels, Macquarie analysts said.

"We believe increased health concerns may result in sustained increase of online sales orders post the virus," they said.

This will potentially dilute margins in the short term because online margins are estimated to be around 0.5 per cent, well below Woolworths' food margin of around 7 per cent and Coles' food margin of around 5.6 per cent.

Macquarie analysts believe Coles and Woolworths' online margins could reach 2.5 per cent through efficiency gains as their businesses reach scale.

Online grocery penetration could reach almost 14 per cent by 2023, they said.

Australian Competition and Consumer Commission chairman Rod Sims said last week the competition regulator did not want the crisis to lead to reduced competition in the food and grocery sector to the detriment of consumers and independent businesses.

6 Apr, 2020
McDonald’s pivots into grocery basics
Inside FMCG

Fast food giant McDonald’s is branching out from Happy Meals to provide basic grocery items to customers at the Drive Thru and takeaway.

From Wednesday April 1, the restaurant chain is offering two and three litre bottles of full cream and skim milk, as well as packs of English muffins and gourmet bread rolls through its contactless services, as “a safe way” for people to basic essentials.

A spokesperson for McDonald’s Australia said the move was designed to “support local communities during these uncertain times”.

Last week, the fast food giant closed the dine-in option at its locations across Australian in response to government’s shutdown measures but, like many other food businesses, continues to offer takeaway, drive-thru and delivery services.

Retail expert Professor Gary Mortimer is a little more sceptical about the thinking behind the latest move.

“With McDonald’s all they’re trying to do is sell inventory that they’ve already pre-booked. The pre-ordered milk would be delivered for the Cafe, and the English muffins and bread rolls would have been ordered for the breakfast menu,” Mortimer told Inside FMCG.

“I don’t think many people will be asking for milk and English muffins with their Happy Meals at the Drive Thru despite their claims that it will make life easier for customers.”

With concerns growing over the prospect of further shutdowns, businesses are innovating to remain relevant to consumers.

Last week The Coffee Club launched home delivered ‘Care Kits’, made up of basic staples including milk, bread and coffee.

The cafe franchise said the aim with the packages is to allow consumers to show someone they care, without being there.

“We know that many Australians are finding it difficult to buy essentials that are in high demand. With many people vulnerable and self-isolating across the country, we’ve worked with our partners to find a way to deliver these essential care packs straight to your door,” The Coffee Club CEO Nick Bryden said.

The basic Care Kit, which is delivered through Uber Eats, offers a standard loaf of bread, plus a carton of milk for $8, but it can be customised to add coffees, cake and other menu items as extras.

Many small independent cafes and breweries are also offering milk and bread for takeaway or drive thru in order to draw consumers in.

“What we are seeing is business trying to pivot and adapt so that they can continue to grow their business and survive during this time,” Mortimer said.

“This is the first level of adaption, developing an innovative offer that takes little effort and little risk. If milk and bread is already being delivered, they can on sell these products with little risk.”

The next stage, Mortimer says, is businesses working collaboratively for better outcomes.

“We should start to see small bars that have a takeaway kitchen connect with a local cafe, so one can look after food and the other can manage coffee, so that both businesses can survive.”

Mortimer suspects that if Stage 4 restrictions are introduced, non-essential retail, footwear, apparel, office supplies, hardware and bottle shops are likely to close.

“They may force cafes to close their doors if people can’t be trusted to maintain social distancing, but it’s likely drive thru services could remain open as people are social distancing by being in their car,” he said.

3 Apr, 2020
Suppliers under pressure as retailers reject 'runaway' price increases
Financial Review

Food and grocery sales are booming due to the COVID-19 crisis but suppliers are facing a squeeze on margins after a 13 per cent fall in the Australian dollar.

Suppliers who source stock from overseas say Woolworths, and to a lesser extent Coles, have played hardball on requests for price increases due to the higher cost of goods stemming from the weaker currency.

They claim Woolworths asked suppliers to mitigate price rises by demanding suppliers hand over more in rebates and discounts or hand back price rises when the dollar rebounds.

"Coles and Woolworths are making a killing at the moment," said one supplier, who declined to be named.

"Woolworths are saying they will entertain price increases due to the dollar but any increase needs to be underwritten by the supplier and paid back once the dollar goes back up," said the supplier. He fears his products may be deleted from shelves if he presses ahead with price rises.

"Basically they are saying that all the downside is for the supplier and none for Woolworths."

Another supplier who sources products from the US said his company was "taking a margin hit," but so was Woolworths on private-label goods it sourced from overseas.

Woolworths said it had received many requests for cost-of-goods price increases from suppliers and was reviewing them, but was reluctant to see ''runaway" inflation at a time when households were under unprecedented pressure.

"We’re concerned about what runaway grocery inflation would mean for Australian households at this time of material financial uncertainty and stress," a Woolworths spokesman said.

"We’ve received a number of requests from suppliers that are completely out of step with movements in the Australian dollar," he said.

"We'll continue to challenge this – fairly and in good faith – on behalf of our customers where it occurs."

Coles chief operating officer Matt Swindells said the retailer would consider requests for price rises from suppliers facing increased cost of goods but its priority was to improve product availability after a two- to three-fold increase in demand in recent weeks.

"We won't be changing our approach to any of our processes on cost price ... if suppliers facing cost price increases come in and have a conversation with the team around the factors driving that it all gets validated," Mr Swindells said.

The Australian dollar has fallen about 13 per cent since January and by 14 per cent year on year, briefly touching a low of about US58¢ last week, increasing costs for about 15 per cent of suppliers who import products.

It is understood some suppliers have claimed 30 to 40 per cent cost of goods increases due not only to the impact of the weaker dollar but higher wage, transport and logistics costs.

Analysts said the major supermarket chains were reluctant to raise prices when household incomes were under pressure and after recent accusations of price gouging. Fresh food prices have increased due to the drought and bushfires.

"No-one wants to be seen to be profiteering," said one analyst, who declined to be named. "It’s a funny time to be asking for price increases."

Both Woolworths and Coles have cut down on the number and depth of promotions in recent weeks and this, combined with higher volumes, would have helped boost retailers' and suppliers' margins, the analyst said.

"There's been a net pullback in promotions, so you've got a price increase by stealth," he said.

Woolworths and Coles are expected to gradually increase the level of promotions next month as sales and volume growth return to normal. However, range reviews are expected to remain on hold for several months.

3 Apr, 2020
Bunnings merger with Adelaide Tools gets green light
Inside Retail

After speculating that Bunnings’ proposed acquisition of Adelaide Tools would lessen competition in the South Australian market, the ACCC has revealed it will not oppose the merger.

According to the competition watchdog, the transaction isn’t likely to substantially impact competition due to the existence of expanding competitors such as Total Tools and Sydney Tools. 

“Although Bunnings has a clear overall focus on the DIY segment, it does market heavily to attract trade customers and is focused on growing its tool sales to tradespeople,” the ACCC said. 

“[However], the differences between Bunnings and the Adelaide Tools businesses and the existence of large expanding specialist tool retailers… meant that we didn’t consider the threshold of a substantial lessening of competition was reached.”

Despite this, the ACCC said the decision shouldn’t be seen as an indication that it wouldn’t continue to scrutinise the DIY retailer, and any attempt to remove any competitive threat to the business would be “very closely scrutinised”.

Bunnings managing director Mike Schneider said the Bunnings team would now work toward integrating the business into the group, while allowing it to operate as a standalone power tools and heavy machinery business.

“While our businesses are very different, we see strong alignment between the Adelaide Tools and Bunnings brands,” Schneider said. 

“We strongly believe that competition is great for customers and we remain as committed as ever to driving customer value through all of our offers.”

3 Apr, 2020
Qantas could be taken over by cashed-up Wesfarmers, Macquarie says
The Sydney Morning Herald

Qantas, Star Entertainment, Domain or Kathmandu could all potentially be taken over by Wesfarmers if the cashed-up retailing conglomerate listens to investment bank Macquarie.

Research from Macquarie's equity strategy team, sent to clients on Thursday, unveiled a laundry list of ASX-listed companies the Perth-based behemoth could target after its Coles sell-down this week.

Wesfarmers offloaded a further 5.2 per cent of its stake in the supermarket chain on Tuesday, boosting its balance sheet with pre-tax proceeds of $1.06 billion, or a profit of around $130 million.

While the primary reason for the sell-down was to shore up its position during the coronavirus pandemic, chief executive Rob Scott told The Age and The Sydney Morning Herald the company was looking at acquisitions and had already been approached by some struggling businesses.

"We have been approached by some companies that are facing funding challenges, and we do look at those opportunities," he said.

Analysts have since been speculating what businesses Wesfarmers could look to snap up, with JP Morgan's Shaun Cousins saying the battered share prices of many companies presented the company with a number of buying opportunities.

Macquarie went one further, issuing a list of businesses which would meet the criteria for an acquisition: shares are down 30 per cent or more from a three-year high, an enterprise value under $5 billion, a return on equity lower than their ten-year average, and a history of profitability.

"This provides us with a list of proven business models, that are the right size and valuations that are currently attractive," they said.

Thirty-eight companies met the criteria, including Viva Energy, takeover target National Storage, car dealer AP Eagers, Bega Cheese, casino giant Crown, Flight Centre, and fellow retailer JB Hi-Fi.

Macquarie also compiled a smaller list of companies which would be a good strategic fit for Wesfarmers, though they do not all fit the financial criteria.

On that list is Ardent Leisure, Boral, Brambles, Domain, Fletcher Building, Incitec Pivot, Kathmandu, Lynas, Orica, Qantas, Star Entertainment and Super Retail Group.

Of these, Macquarie picked Orica and Incitec as the most likely targets due to their alignment with Wesfarmer's chemicals, energy and fertiliser segments.

Wesfarmers put a $1.5 billion bid in for rare earth miner Lynas last year, which was rejected by the company. It dropped the bid in August, but Macquarie believes it could revive its pursuit of the miner given its decline in value.

In retail, Kathmandu and Super Retail would have "sufficient scale" to be relevant to Wesfarmers, Macquarie said, even though the analysts viewed both as less likely targets given Wesfarmers already has significant retail exposure.

This was a view shared by Wesfarmers shareholder Contact Asset Management, with director Will Culbert telling The Age and The Sydney Morning Herald Wesfarmers shouldn't limit itself to the retail sector.

"As a conglomerate with a long and successful history, I don’t think that they need to necessarily constrain themselves to only the retail sector," he said.

"It is difficult to speculate on what Wesfarmers will do...however, it appears to be a very good time to have a war chest and a strong balance sheet. We would expect Wesfarmers to maintain its long-established discipline of acquiring businesses that meet its [return on capital employed] hurdles."

Despite Macquarie's extensive shopping list, it did temper expectations of an imminent acquisition, saying the company is "likely to be conservative given current economic uncertainty and looming risk of shutdowns".

Wesfarmers shares were down 1.8 per cent to $35.02 by mid-afternoon on Thursday.

3 Apr, 2020
ACCC will not oppose Asahi-CUB deal after sale of major cider and beer brands
Inside FMCG

Australia’s competition watchdog, ACCC, said it will not oppose Asahi’s proposed acquisition of Carlton & United Breweries (CUB) now that the Japanese beverage giant is offloading a number of its well known cider and beer brands.

ACCC had raised concerns that the deal could lessen competition in cider and beer due to the number of major brands across the two portfolios, prompting Asahi to put its Strongbow, Bonamy’s and Little Green cider brands and the Stella Artois and Beck’s beer brands up for sale.

ACCC chair Rod Sims said. said the sale of these brands to an ACCC-approved buyer will be sufficient to address competition concerns and invites another business to enter the relatively concentrated industry.

“The ACCC was concerned that without the divestments, the proposed acquisition would substantially lessen competition in the cider market and remove a vigorous and effective competitor in the beer market,” Sims said.

“Without the sale of five beer and cider brands including Strongbow and Stella Artois, the combined Asahi-CUB company would have accounted for two thirds of cider sales in Australia, and owned the two largest cider brands, Somersby and Strongbow.”

Asahi’s beer brands, including Asahi Super Dry, Peroni, Mountain Goat, Cricketers Arms and Two Suns, account for just 3.5 per cent of beer sales in Australia, but the ACCC was concerned that the deal would remove a rival “capable of competing strongly against the two largest beer brewers”, CUB and Lion.

Asahi welcomed the ACCC decision and is taking next steps to proceed with a sale.

“We will now be putting in place steps to establish a standalone, independent business unit to help manage the divestment of these brands,” Asahi said in a statement.

“The deal requires the approval of the Foreign Investment Review Board (FIRB) and Asahi will continue to work with the regulators towards this.”

Asahi has provided a court-enforceable undertaking to the ACCC to divest the five brands, which also ensures the brands get the same access to bars, pubs and clubs as well as off-premise space under tap-tying agreements as Asahi’s brands for the next three years.

CUB parent, AB InBev, has also provided a court-enforceable undertaking to facilitate the transfer of relevant beer brand rights and obligations to the future buyer or buyers.

The ACCC said it will issue a public competition assessment “in due course”.

31 Mar, 2020
Craft brewer pivots to hand sanitiser as firms rise to virus challenge
The Sydney Morning Herald

Young Henrys, an independent craft beer maker in Sydney's inner west, has just made a new brew. A successful debut batch recently generated plenty of inquiries, and the beer maker is gearing up to try its new recipe again next week.

But the brew won't be a lager, an ale, or any other kind of beer. Instead, Young Henrys, like a growing number of businesses across the country, is making hand sanitiser.

"Having a distillery we are constantly using high-grade, high-alcohol ethanol, blending, distilling to make gin and different products. So we're constantly using the main ingredient of hand sanitiser, which is ethanol," said Young Henrys Brewing and Distilling co-founder and director Oscar McMahon.

Young Henrys' swing to hand sanitiser is part of a pattern being repeated across Australia in response to the coronavirus pandemic, as companies modify production lines to make goods in high demand or find ways to make more of what they already produce.

The ASX-listed medical device company ResMed is more than tripling its output of ventilators, while other manufacturers are examining whether they can switch to medical device components, or personal protective equipment.

"We started making some batches of hand sanitiser just for use by our people, and we thought 'look, it's something we can make instead of going out and buying it', and there wasn't a lot in the shops anyway," Mr McMahon said.

After word spread about the product, Young Henrys fielded inquiries from charities, shelters and nursing homes interested in its sanitiser.

"We've had a lot of people coming to us and say 'how much could you make?', 'Is there any chance that you could make some for us?' It has been crazy. We could probably have sold about 50 times more than what we'd have the capacity to make," he said.

Mr McMahon said the brewer was not trying to be opportunistic or make a profit out of the product, and did not know if it would, or even could sell.

The brewer is following World Health Organisation guidelines on hand sanitiser, and Mr McMahon feels it is appropriate to make it in the current environment.

"It's something we're able to make, so we're making some, we're going to gift some to a certain organisation. It's another element of strangeness in this world gone mad," he told The Age and The Sydney Morning Herald.

Young Henrys main game is wholesale beer sales. It also has a bottle shop and a small tasting bar, which Mr McMahon said "until last week had a 100 person capacity".

But with the closing down of the hospitality industry because of COVID-19, Mr McMahon said the craft brewer had lost 70 to 80 per cent of its revenue.

Like Young Henrys, ASX-listed Pro-Pac Packaging is fielding a rush of calls, with demand for its plastic products surging because of the pandemic.

In particular, demand has soared for plastic bottles it makes that are filled with hand sanitiser by its customers, as well as the plastic "closures" fitted to the bottles.

Pro-Pac makes the bottles at two Melbourne factories. "They're very busy. We've added additional shifts to be able to rise to the surge in demand," said Pro-Pac boss Tim Welsh.

"We are finding that the product is in such short supply that the waiting list for those products is many weeks, and turning into months by the day ... our customers, the fillers, are having to wait longer than they ordinarily would to be able to get deliveries," he said.

Before the pandemic Pro-Pac was typically able to meet new orders within three days.

31 Mar, 2020
For Coca-Cola Amatil, 2020 is now the year to 'protect the business'
SOURCE:
The Age
The Age

Many corporate headquarters feature expensive artwork on the walls, sweeping city views and plush furniture. But the office these days for Coca-Cola Amatil boss Alison Watkins is neither swanky, nor high-rise.

Ms Watkins, one of Australia's top businesswomen, is now running the $6.1 billion drinks giant from the pool room in the "old rambling" farmhouse on her farm in south-west Victoria.

Her desk has been strategically positioned in the corner of the room, which she likens to the pool room in the famous 1990s Australian movie The Castle, after her tech-savvy 25-year-old son identified it as the best location for Internet reception. Across the pool table her daughter, a university student, often sits at her own desk.

The farm, a cattle and cropping property near Camperdown, puts Ms Watkins about 1000 kilometres away from Coca-Cola Amatil's (now de-populated) headquarters in North Sydney.

During normal times, the corporate high-flyer is based in Sydney during the week and spends as many weekends as possible on the farm.

"I always love being here and so it's kind of strange now to be able to be here for quite a bit of the time," she says.

Ms Watkins is speaking almost daily with the company's chairman or directors, and the entire board is meeting either weekly or fortnightly via the WebEx platform.

While Ms Watkins is comfortable with her working-from-home arrangements, she acknowledges she is in a fortunate position compared to many others, who might have young children, pets or partners at home to contend with.

"Increasingly, it's going to be a really stressful time for a lot of people, both because of these confined conditions that we're all operating under, but you add on top of that the reality of people losing their jobs, right as we speak," she says. "I know a number of people whose families are directly impacted by that. So, adding in the financial stress, the uncertainty, I think it's such a really challenging time," she says.

The unravelling of the Australian stockmarket and the dramatic softening in economic activity that has hit the nation seems to have happened in a flash.

Less than six weeks ago, Ms Watkins unveiled impressive Coca-Cola 2019 results, with all of its business segments delivering revenue growth.

The market responded positively, pushing its shares up 8.6 per cent on a day the Australian market hit a record high of $13.07. They have since lost almost 40 per cent of their value.

And on that day, Coca-Cola forecast mid-single digit earnings per share growth in 2020. But the guidance was withdrawn within four weeks following an escalation in the coronavirus outbreak, a string of profit warnings from other companies, increased restrictions imposed by governments and great uncertainty about the impact of the virus.

Ms Watkins says 2020 is now a year of "protecting the business." "It's really quite unthinkable, the speed of the change that's happened," she says.

"We mentioned at that time that we were alert to the ongoing economic effects of the bushfires and also COVID-19... but I think none of us appreciated just how, within the space of a matter of weeks, it would reshape our world. And certainly our humble plans for Coca-Cola Amatil with it," she says.

However, she emphasises that Coca-Cola Amatil is a strong cash generator, profitable, and has a good balance sheet.

"We've got a very secure financial position and I think for us 2020 is now all about protecting what it is that makes us strong as a business and making sure that we, to the extent we can, protect the jobs, protect our workforce, protect our business continuity and protect our customer relationships. And try to come through this health crisis stage intact, and able to reshape and accelerate," she says.

"I don't think we're going to come through this stage with the economy and our customer base looking the same. There's certainly going to be some changes and so we will need to reshape," she says.

A key determinant is how customers that have been hit hard by shutdowns, including restaurants and bars, emerge from the crisis.

"I suspect it's going to be quite a different landscape that we'll be dealing with, because unfortunately quite a number of them won't be around, or it will take quite some time for them to really be able to get going," she says.

"Our resources are lined up behind our customers. And so a reshaping of our business will reflect the way that our customers and channels might be reshaped," she says.

Ms Watkins says Coca-Cola Amatil has already "been through a lot of cost reductions, so it's not likely to be so much about that for us. It's more about what does the customer landscape look like".

The company's delivery operations have already been altered. Normally, it delivers to supermarket distribution centres on B-double trucks, with the retailers then organising loads to stores. But now it is delivering direct to supermarkets in smaller trucks, and sending out staff to help unload and put products on shelves.

31 Mar, 2020
Demand for booze delivery has risen sharply in Australia, as the coronavirus forces people indoors
Business Insider Australia

With the coronavirus pandemic forcing Aussies to stay indoors, the demand for alcohol delivery has gone up.

As panic buying saw many Australians flock to supermarkets to stock up on food and toilet paper, alcohol was a prominently featured item on many shopping lists.

Woolworths Group told Business Insider Australia via email BWS has seen “some elevated customer demand” amid the pandemic.

As major supermarkets Coles, Woolworths and Aldi put limits on certain items you can buy in store, some liquor stores followed suit.

BWS, along with fellow liquor store Dan Murphy’s put restrictions on how much alcohol people can purchase. At BWS the limit includes 4 cases of beer, 12 bottles of wine, 4 bottles of spirits and 4 cases of cider. At Dan Murphy's, it’s 18 bottles of wine, 6 bottles of spirits or 3 cases of beer, cider or premix.

Western Australia, however, has its own state-wide limits, allowing only 1 carton of beer, cider or pre-mixed drinks, 3 bottles of wine, 1 litre of spirits and 1 litre of wine. Or you can get a combination of any two different options on the list.

Breweries are continuing production

When the federal government announced closures of venues including pubs, clubs and restaurants – save for takeaway and delivery – Carlton and United Breweries (CUB) and Lion worried that Australia would run out of beer in three months if they too, were shut down, the Sydney Morning Herald reported.

CUB produces brands such as Victoria Bitter and Carlton Draught while Lion owns brands including XXXX and James Squire.

Coopers Brewery told Business Insider Australia via email that with hotels and clubs being closed, it’s now concentrating on producing packaged beers.

It is also supporting clubs, pubs and restaurants by offering a credit on all full and capped kegs that are returned to the company.

Production, however, is still going ahead at Coopers, with the brewery adding additional hygiene measures, social distancing and encouraging those who can work from home to do so.

Likewise, CUB and Lion are also fully operational. And Lion is offering its customers a credit and taking back unused kegs at no charge.

Some distilleries, on the other hand, have been making hand sanitiser to boost supplies in around the country such as Archie Rose and Manly Spirits Co.

Online alcohol delivery soars

Alcohol delivery service Jimmy Brings told Business Insider Australia via email its customers have grown 23% compared to the same time last year. And it has had more suppliers reaching out to it too, as well as people applying to be drivers.

“We are actively looking to hire new drivers everyday,” Jimmy Brings marketing manager Angelina Nguyen said. “In the last 30 days, we’ve had an 800% increase in job applications compared to the previous 30 days. This Monday, we had 320 job applications on that one day alone.”

Sydney has seen the most demand.

“We actually had one of our highest single order values this week come from Sydney, the transaction was $3,626 compared to our average of around $60,” Nguyen added.

Jimmy Brings has also seen a rise in sales of extras like condoms (29% increase) and Panadol or Nurofen (34% increase). Plus, customers are ordering alcohol much earlier.

“Our peak is now 5pm rather than 9pm with more people enjoying digital knock off drinks together,” Nguyen said.

Fellow alcohol delivery service Tipple has also seen a jump in orders through its platform over the past few weeks.

“There’s been a strong influx of new customers to our alcohol delivery app as well as an uptick in purchases from existing customers which tells us that people are doing the right thing and staying home while still trying to have a good time,” Tipple head of marketing Michael Calle told Business Insider Australia via email.

Calle added that some businesses have also been treating their employees to a bevvy.

“A few companies have also been surprise-ordering for their employees and getting their team on video calls at the end of the week as a replacement for office drinks which has been a nice surprise,” he said.

Instead of going to suppliers directly, Tipple partners with local independent bottle shops. In fact, Tipple began as an independent bottleshop itself over five years ago and still has many roots in the industry.

While the service has been operating in Melbourne much longer than Sydney, over the last week, Sydney has outpaced growth in Melbourne. “Having said that, we’re up hugely across both and are currently experiencing over 50% week-on-week growth of active users across our mobile apps and website,” Calle said.

To keep these stores operating, Tipple is in the process of opening its platform and delivery network to any bottleshops that wants to start delivering to their existing customers.

“We’ve also been inundated with requests from other independent retailers looking to start delivering in order to continue servicing customers,” Calle said.

Tipple also put a call out to any businesses impacted by coronavirus-related shutdowns to get in touch with them if they need assistance with deliveries.

The company is also looking for more drivers to assist with increased demand it anticipates over the coming weeks.

27 Mar, 2020
Whiskey Producers Are Making Hand Sanitizer. Here's How They Organized.
Entrepreneur

The world needs hand sanitizer — far more than the existing hand sanitizer industry can produce. So the American whiskey industry, along with other alcohol industries like craft breweries, have begun stepping up. They’re hitting pause on making beverages, and have begun making the alcohol-based sanitizers that save lives.

It’s an important example of how entrepreneurs can pivot and contribute to the fight against Covid-19. And it contains important lessons for other entrepreneurs on how to do the same.

Lift regulations.

In a way, the American whiskey industry was already primed for this work. Back in 1941, after the attack on Pearl Harbor, the American government assumed control of the distilling industry and converted many of the stills to produce high-proof ethanol. This ethanol was used for antifreeze, munitions, octane boosters, lacquer, synthetic rubber and more.

Today, no government mandate was required — but government help was. When the COVID-19 crisis first hit, some of the smaller distilleries began trying to share their alcohol; any whiskey manufacturer will have parts of the distillate that can’t be used in beverages but could become a general-purpose cleaner. However, laws stood in their way. Strict regulations control what can and can’t happen in a distillery, and these businesses are heavily taxed. With these laws in place, the distilleries couldn’t be helpful.

The industry started raising its voice, and policy-makers responded. Local, state and even federal laws were lifted or altered. On March 18, the Alcohol and Tobacco Tax and Trade Bureau, which oversees the industry, also cleared a path: It waived parts of a law, including requirements that distilleries obtain permits or bonds to produce hand sanitizer. 

Now distilleries could finally get to work.

Create many different solutions.

Each distillery has taken a somewhat different path. Some distilleries chose to make sanitizing products, and then provide them for free to first responders and critical facilities and businesses. Others have chosen to sell their sanitizing products to the public, as a way to keep their staffs paid.

In Kentucky, the response from the bourbon industry has been swift and decisive. Brown-Forman, one of the largest American-owned spirits manufacturers, started delivering free sanitizer to first responders in Woodford County, the location of its Woodford Reserve distillery. (Its Old Forester Distillery in Louisville, Kentucky will follow suit.) The Neeley Family Distillery is making small batches of hand sanitizer and allowing people to bring their own bottles to fill up for a donation to cover the costs. Lexington Brewing & Distilling, Rabbit Hole Distillery and Wilderness Trail Distillery have all announced efforts to produce hand sanitizer as well.

Outside of Kentucky, many small distilleries are doing the same — including Smooth Ambler in West Virginia, Koval Distillery in Chicago, Corsair Distillery in Tennessee, American Craft Whiskey Distillery in California and Whisky Acres Distilling in Illinois.

Share information among competitors.

But there’s a problem: Just because a distiller can make whiskey, that doesn’t mean they know how to make alcohol for hand sanitizer. To make it work, the industry has come together to share information — producing webinars, online guides, and more. Distilleries are modifying their equipment and learning on the fly.

At Catoctin Creek Distillery in Virginia, Distiller Becky Harris says she’s working closely with the American Craft Spirits Association (ASCA), with daily meetings to devise the best possible course of action for distillers wanting to produce hand sanitizer. At one point, her husband and business partner, Scott Harris, was receiving 50 emails every hour from people asking about hand sanitizer. She says the media attention on this topic has been helpful, because it has shown regulatory bodies there is a huge surge in demand for these products, which in turn enabled the ASCA to streamline and expedite the process of building guidelines and finding supply in the supply chain. 

As the situation evolves, distilleries are also having to change their plans. In Michigan, for example, the Traverse City Whiskey Company originally wanted to sell hand sanitizer to the public — but then its inventory of 10,000 units sold out overnight. “The response and demand has been shocking,” says Chris Fredrickson, the company’s co-founder. “Because of this, we've evolved our strategy from retail to include medical and first responders, as that has been the greatest need.”

What will come next? Nobody knows, of course — but more distilleries join the effort to produce hand sanitizer, and owners say they’ll look for even more ways to band together and support people in the industry. “I would say that whiskey drinkers are the most generous people on the planet,” says Bill Thomas, owner of the Jack Rose Dining Saloon in Washington D.C., who I spoke with recently for American Whiskey Magazine. “And this is absolutely proof that the whiskey drinker is the best kind of human being on the planet.”

It’s also a lesson for other industries during this difficult time: With loosening regulations, you can collaborate with your peers on new innovations ... and start solving any problem you can.

23 Mar, 2020
Reckitt Benckiser working ‘around the clock’ to maintain supply of hygiene products
Inside FMCG

Consumer healthcare company Reckitt Benckiser is among the FMCG giants working around the clock to ensure a constant supply of hygiene products to Australian retailers amid growing fears over global health pandemic, COVID-19.

In recent weeks, consumers have flooded supermarkets to stock up on healthcare product and household essentials, leaving shelves of most supermarkets stripped bare for hours on end.

Glenn Cochran, regional director RB Health ANZ told Inside FMCG that the business is working globally to ensure supplies to retailers and end-consumers are impacted as little as possible during this “volatile time”.

“We have seen an unprecedented increase in demand for a range of products since COVID-19 began,” he said. “We have also seen demand increase across other RB Health products including Dettol household cleaners and personal wash solutions, as well as Nurofen and Nurofen for Children products.

“We are working around the clock with our various global teams to provide Australians with hand hygiene and analgesic products.”

Demand surged following the recommendation from the World Health Organisation (WHO) to practice good hand hygiene by frequently washing hands using soap and water and by using an alcohol-based hand sanitiser, Cochran explained.

With consumers growing increasingly anxious over the limited access to health products, Cochran said the company is doing its best to ensure fair distribution.

“We are maintaining ongoing conversations throughout our supply chain to ensure ongoing supply is shared equitably among retailers so that consumers have accessibility to the available stock, while we expedite an increase in production.”

He also highlighted the importance of educating consumers on health and self-care during times like this.

“RB Health’s mission is to make access to the highest quality hygiene and wellness solutions for all Australians a right not a privilege. Our goal is for RB Health brands, including Dettol, to use its brand footprint to educate consumers on self-care and we will continue to do so throughout this current situation and for the long term,” he added.

Dettol runs a ‘Healthy Habits’ school education initiative to teach kids good hygiene practices.

Bubs Australia has also applied additional measures to its supply chain for its infant formula product range such as Bubs Goat Milk formula and Bubs Organic Cow Milk formula to meet increased demand from parents who need to secure supplies for their babies.

“We have greatly increased our capacity and are working to expand our inventory cover and meet the supply needs of our retail partners across both goat milk and organic grass-fed cow’s milk-based formula, moving to two shifts per day, with capacity to move to three shifts if required,” said Carr.

The infant formula maker is working with retailers such as Coles, Woolworths, Big W and Chemist Warehouse to ensure the supply of Bubs Organic 365 days Grass Fed Infant Formula range and Bubs Australian Goat Milk infant formula range.

Carr said Bubs has extended free shipping offer for all orders of baby food and infant formula via their website.

“As always, our first concern is for the health and safety of the Bubs Family. For our Bubs Corporate office, we have implemented arrangements to underpin business continuity and the continued health and well being of our people to the greatest extent possible in these testing times,” Carr said.

Earlier this month, toilet paper manufacturers including Kimberly-Clark were the first to ramp up production to meet the surge in demand from panicked consumers.

Supermarkets were forced to suspend online services this week as shortages hampered their ability to fulfill orders.

23 Mar, 2020
24-hour deliveries to stop NSW bulk buying
Inside FMCG

Supermarkets in NSW will be able to receive deliveries 24 hours a day under new regulations introduced to stop panic buying amid the coronavirus pandemic.

The NSW government has overridden local council rules which restrict some stores from restocking shelves and operating loading docks outside regular business hours, Premier Gladys Berejiklian said on Friday.

“We need to make sure these products can move from factories to shelves as quickly as possible. We are moving quickly so truck drivers can make deliveries to supermarkets around the clock. It is important that people now stop unnecessary panic buying,” Berejiklian said in a statement.

The move follows calls from Australian retailers last week for state governments to temporarily lift curfews to ease shortages.

The regulations apply immediately and will remain until the crisis is over. Berejiklian on Thursday said there was “absolutely no need to panic buy or hoard”.

“We are ensuring there’s a solid supply chain and we also want to make sure those most vulnerable who can’t go to the shops every day because they’re immobile, or they’re older or vulnerable, do have that support as well,” she said.

NSW Planning Minister Rob Stokes said the new regulations make clear deliverers can supply stores and retailers with essential goods at all times.

“Councils and retailers have been working well together to allow greater flexibility in delivery hours and this change gives everyone the certainty we need to ensure these deliveries can continue,” Stokes said in a statement.

Property development industry group The Urban Taskforce on Friday welcomed the new regulations.

“In an era of delayed government responses to crises, this swift action is very welcome,” chief executive Tom Forrest said in a statement.

Almost all councils across Australia have agreed to relax truck curfews to allow more deliveries to supermarkets. Coles has taken out full-page newspaper advertisements announcing limits on toilet paper, pasta, flour, eggs, some meat, hand sanitiser and soaps amid bulk buying.

Woolworths is also limiting purchases of similar products, as well as chilled fresh milk.

Coles chief operating officer Matt Swindells said shops were geared up to put items on the shelf as quickly as possible, with more than 5000 extra casuals employed.

23 Mar, 2020
Supermarkets band together to call for better treatment of staff
Inside FMCG

Australia’s biggest supermarkets have come together to tackle the issue of violence against staff as panicked consumers descend on stores.

A joint advertisement campaign signed by Aldi, Coles, IGA and Woolworths was published in national newspapers on Wednesday thanking Australians for their patience in extraordinary times.

“Through these challenging times, the aim of every Australian supermarket is to provide you and your family with the food and essentials you need,” the joint statement reads, as seen on Coles’ website. 

“That’s why collectively, we want to reassure you that your wellbeing, and that of our teams, will always be our priority.”

But in light of aggressive shopper behaviour toward staff and customers alike, the statement asked Australians to treat their dedicated employees with courtesy and respect. 

“No-one working or shopping in any of our stores should experience abusive or aggressive behaviour.”

The advice comes as shopper behaviour reaches new lows, with a Victorian Woolworths employee assaulted and stabbed while collecting used trolleys yesterday in what police are describing as a “random incident”.

The staff member was airlifted to Alfred Hospital in a serious but stable condition.

Videos have also emerged online in recent weeks of customers verbally attacking retail staff and physically attacking each other.

The SDA, the union which represents retail workers, including supermarket workers, has also called on the local community to keep their cool and respect workers during this time.

SDA national secretary Gerard Dwyer said that reports of workers being abused and harassed are disappointing and unacceptable.

“We understand that many people in our community are worried at present, but we also need to remember that the workers you see at the supermarket and other places are in the same boat as you. We’re all in this together,” Dwyer said.

“These are our neighbours stocking our shelves and manning our cash registers. They are also your friends’ sons and daughters, your colleagues’ partner or parent. Sometimes we’ve all just got to step back and remember that.”

SDA branches across the country have reported significant increases in calls in relation to customer abuse of late.

“No one should be abused simply for doing their job. Sometimes we all just need to be reminded of that,” he added.

Prime minister Scott Morrison echoed these sentiments, calling panic buying “ridiculous” and “un-Australian”.

“On bulk purchasing of supplies. Stop hoarding. I can’t be more blunt about it. Stop it. It is not sensible, it is not helpful and it has been one of the most disappointing things I have seen in Australian behaviour in response to this crisis,” Morrison said according to The Guardian.

“That’s not who we are as a people. It is not necessary. It is not something that people should be doing.”

Aldi made the decision to alter store trading hours as of Wednesday to allow staff more down time with family and a quiet period to restock and clean the stores.

All stores will now trade from 9:30AM to 7:00PM unless other state and local trading restrictions apply.

The decision was made to give store employees more time to restock shelves with products and be ready for customers; to give employees in the Distribution Centre time to get the stock onto trucks and into stores and to allow thorough cleaning of the store, the retailer said

“We want our employees to take a break and look after themselves and their families,” Aldi added in a statement.

AAP reported that Coles is trying to employ more than 5000 casual workers to help restock its supermarkets quicker under a fast-tracked induction process, and will hire more Coles Online delivery van drivers after temporarily suspending its online services this week.

Both Woolworths and Coles introduced a shopping hour specifically for elderly shoppers and people with disability as many have struggled to source popular items of late.

Inside FMCG approached Aldi, Coles, IGA and Woolworths for comment.

Reporting by Ruth Hogan and Dean Blake.

23 Mar, 2020
How Australia's small businesses are staying afloat amid the coronavirus pandemic
SOURCE:
ABC News
ABC News

Butcher Gary Hine has been running his shop in Mundaring, in Perth's hills, for 13 years and is a big believer in good, old-fashioned customer service.

But as the number of confirmed cases of coronavirus rises in Western Australia, he is becoming increasingly concerned about the health of his staff and customers.

So, from next week, he'll shut up shop — instead operating his business 100 per cent online.

"It's not a decision we took light-heartedly," Mr Hine said.

"There were a lot of sleepless nights with different scenarios going around in my head.

"But the most important thing is that we keep ourselves safe, our staff safe and our customers safe."

From Monday, customers will not be able to enter his butcher shop, instead placing their orders online, waiting for a notification telling them their produce is ready, pulling into the car park and having their meat loaded into their vehicle.

Mr Hine said he had a loyal customer base and was confident they would support the new business model.

"There's a lot of speculation out there at the moment that it's going to be all doom and gloom," Mr Hine said.

"I see it as an opportunity to adapt and to continue to keep our doors open and service the people who have looked after us for so long."

"It's a lot better than us getting sick and having to shut the doors."

 

'We can make sure everyone at least has toast'

ABC News

Further south, the Coogee Beach Bakery has just launched a free delivery service so that its customers, many of them elderly, can get staples like milk and bread dropped off at their door.

Owner Jackie Mayoss said the decision was a no-brainer for her and she was prepared to wear the delivery cost in a bid to support her local community.

"We know all of the streets, we know all of the customers. We're happy to drop things off and make sure they're OK," Ms Mayoss said.

"We're not going to be making extra money but it's nice to be able to help your neighbours.

"We can't do a lot, but we can make sure that everyone can at least have toast."

 

Books to your door

Sam Baker and his partner Natalie Latter founded their bookshop, Rabble Books & Games, in Maylands, almost two years ago.

ABC News

In the wake of coronavirus, the pair has also launched a free home delivery service for customers who may not be able to — or want to — enter the store in person.

"We are very keen to always be participating in our community and creating a space that is inclusive and is safe, and [the question is] how do we continue to do that?" Mr Baker said.

The delivery service will operate in Maylands and nearby suburbs, but Mr Baker said people had volunteered to make deliveries further afield.

"For the most part, it's going to be me driving the hatchback around," he said.

"We do really have an obligation, especially as a public space, to make sure that we are doing everything we can to, as they say, flatten the curve."

Mr Baker hopes the new service will enable him to continue to pay his four casual staff members, even if they have to self-isolate at home.

"I don't think there's anybody who works here who doesn't depend on that income," he said.

"It's going to be pretty tight coming up.

"There are a lot of changes that I think we're going to have to make on the fly.

"We're going to have to adapt to the situation as it develops."

This week the WA Government announced an economic stimulus package worth $607 million in an attempt to stave off the impacts of the coronavirus outbreak.

It includes a one-off grant of $17,500 for small to medium businesses with a payroll of between $1 million and $4 million.

It will cost the Government $114 million and is expected to bring relief to 7,400 businesses in WA.

20 Mar, 2020
Aussie retailers are beefing up their delivery networks, as coronavirus pushes shoppers online
Business Insider

Australia’s national postal service and major retailers are putting new measures in place to deal with the coronavirus pandemic, as more and more housebound Australians turn to online shopping.

A spokesperson for Australia Post said the company was confident it would be able to keep up with any spike in delivery demand, noting there was “plenty of capacity in the network”. The government-owned company pointed to the Christmas period, when it experienced its busiest month in history, with 40 million parcels delivered in December, as an example of its capability.

However, the business is putting in place other measures to make online shopping safer and easier for Australians staying indoors. Parcels will no longer require a signature for delivery or collection, with drivers or post office staff instead able to sign on a customer’s behalf and leave it at the door.

Major supermarkets Coles and Woolworths have both reined in their online delivery and click-and-collect options for groceries, with Coles suspending the service nationally and Woolworths suspending delivery in Victoria.

Both companies said last week they had seen an unprecedented and significant increase in online orders as increasing numbers of Australians work from home and self-isolate due to the virus.

To combat this, the two are currently hiring additional fulfilment workers to boost online delivery capabilities, and Coles has put the call out for another 60 delivery drivers. Woolworths, which uses third-party delivery partners, said it was “working closely” with them to increase the number of drivers in its network.

Last week, it also took the unusual step of recruiting around 20 head office staff to help stack shelves and pack orders in its online distribution centres.

Outside of groceries, analysts have predicted a bump in online sales across the broader retail sector.

Online electronics and home goods retailer Kogan recently warned customers it was experiencing a high volume of orders across Australia and New Zealand, saying delivery times could be affected.

A spokesperson for the e-tailer said its most popular products in recent times included smart TVs with inbuilt streaming, freezers, computer monitors, standing desks, laptops and home office furniture, as working Australians kit out their home workstations.

EBay Australia managing director Tim MacKinnon said he expected to see an increase in shoppers coming to purchase from eBay, and that the retailer had already seen a run on items such as health products, video games, books and cleaning products.

“We expect, as retailers see offline traffic decrease, even more will set up a channel through eBay,” he said.

“We also think we’ll see more Australians use eBay to sell from home as you can list and ship items without having to have contact with the buyer. People may start eBay businesses as a way of generating income.”

Australia Post said it was currently seeing international delivery delays due to the coronavirus, but was “working with partner airlines and other postal operators to move items as quickly as possible”.

While online demand in the current and coming weeks may hit unprecedented levels, analysts are predicting enthusiasm for online grocery delivery will persist after the virus is contained, with Morgan Stanley saying it could lead to a fundamental shift in behaviour.

“We see this global surge in online grocery adoption changing consumer behaviour as the extent to which people realise the ease/convenience of shopping for groceries/consumables online over the next few weeks/month should lead to more long term online grocery purchasing,” it said.

20 Mar, 2020
Pernod Ricard donates alcohol to combat hand sanitiser shortage in France
Inside FMCG

French alcoholic beverage brand Pernod Ricard is donating pure alcohol to French pharmacies to boost the production of hand sanitiser after health authorities in the country expressed concerns over a potential shortage due to the COVID-19 outbreak.

Ricard SA is donating 70,000 litres of pure alcohol to Laboratoire Cooper, the leading supplier to pharmacies in France, to

“This will allow for increased alcohol deliveries to pharmacies to produce hydroalcoholic gel, the equivalent of approximately 1.8 million individual 50 ml vials,” the company said on Wednesday.

Cooper will donate the equivalent amount to various health care associations.

The move follows a decision by LVMH, the owner of luxury brand Louis Vuitton, to use its perfume production lines in France to make hand sanitiser.

The factories, which are responsible for the creation of brands such as Givenchy and Christian Dior, began creating hydroalcoholic gels this week.

“LVMH will use the production lines of its perfume and cosmetic brands… to produce large quantities of hydroalcoholic gels from Monday,” the company announced on Sunday.

“These gels will be delivered free of charge to the health authorities.

“LVMH will continue to honour this commitment for as long as necessary, in connection with the French health authorities.”

Pernod Ricard subsidiaries globally are also contributing to local efforts to fight the pandemic.

In Sweden, Absolut Vodka is offering spirits at large scale to produce hand sanitiser for public health care, while Pernod Ricard Spain and Irish Distillers in Ireland have announced they will assist authorities with production of hand sanitiser through their technical, human and production facilities.

In the United States, Pernod Ricard’s Ft. Smith, Arkansas manufacturing plant and distilleries for Rabbit Hole in Kentucky, Smooth Ambler inWest Virginia and TX Whiskey in Texas are also producing the in demand product.

“As the world is facing a major pandemic, companies must mobilise, not only to ensure the safety of their employees, but also to contribute to collective efforts in accordance with their capabilities,” Alexandre Ricard, chairman and CEO of Pernod Ricard said. 

“By sharing our resources and making our production facilities available wherever they are needed, we are supporting our fellow citizens and local authorities. I would like to thank our employees who have worked hard to make everything possible in record time, all over the world.”

Some ethanol producers worldwide said demand is up for their products due to customers stockpiling hand sanitiser.

16 Mar, 2020
Mondelēz names next president as Amanda Banfield departs for Nando’s
Inside FMCG

Mondelēz International has appointed Europe-based president Darren O’Brien to lead Australia, New Zealand and Japan, following Amanda Banfield’s decision to take up the chief executive role at restaurant chain Nando’s.

The snacks giant announced Banfield’s departure on Tuesday after over a year as president of the region and having held numerous roles at Cadbury/ Mondelēz over the last 30 years.

O’Brien has been with Mondelēz since 2008 and is currently based in Zurich as president, Meals Europe and the Global Category Team. He will take up the role on May 1, a month prior to Banfield’s start date at Nando’s.

O’Brien has held numerous senior leadership roles across Mondelēz International, including Modern Trade director Asia Pacific, managing director Australia and New Zealand Meals and president Asia Pacific for the Cheese and Grocery business.

Maurizio Brusadelli, executive vice president, and president Asia, Middle East and Africa said O’Brien’s skills in strategy, sales and branding as well as his relationships inside and outside the business, having worked at Fonterra, Mars Petcare, Diageo and the Smiths Snack Food Company, will help the company drive growth.

“He brings an entrepreneurial ability, ‘can do’ spirit, and proven track-record in energising teams, driving new opportunities and growing businesses profitably,” Brusadelli said.

In his most recent position, he is credited with transforming the company’s multi-billion dollar cheese and grocery business across Europe, “step-
changing growth and profit trajectory, driving market share gains on both the global Philadelphia brand as well as key local jewels”.

Brusadelli thanked Banfield for her contribution to the business, saying she brought “stability, collaboration and alignment,” having led the business through several transformations.

“Amanda is a passionate and inspiring people leader who has achieved an excellent record of success during her career. We wish her the very best for the future,” he said.

Outgoing Nando’s CEO Craig Mason said Banfield’s strong brand and multichannel experience and enterprise leadership skills, put her in a great position to lead Nando’s in its next stage of growth.

Mason, has over 20 years experience in FMCG and restaurant brands and oversaw the rollout of a loyalty program, recently named Loyalty Program of the Year at the 2020 Retailer Awards, and the integration of Nando’s with third-party platforms, Uber Eats, Deliveroo and Menulog.

Mason said the decision to leave was incredibly difficult, but he would like to spend more time with his young family. He is looking for another role, but still exploring his options.

16 Mar, 2020
A2 Milk expands into Canada with Agrifoods
Inside FMCG

The a2 Milk Company is set to bring its liquid milk products to the Canadian market later this year through a licensing agreement with Agrifoods.

Agrifoods, the dairy co-operative behind brands such as Organic Meadow, Meadowfresh and Earth’s Own, will be responsible for the production, distribution, sale and marketing of a2 branded milk in Canada and will help the New Zealand dairy company to source milk locally from Canadian dairy farmers.

Interim CEO of The a2 Milk Company, Geoffrey Babidge, said the partnership will help build on their success in the US.

“This arrangement gives us the ability to leverage the brand development work we have already undertaken in North America and expand into the Canadian market with a well-respected partner,” he said.

The company’s US chief executive Blake Waltrip said he is confident that Agrifoods’ experience and infrastructure will be of great benefit to the company.

“Signing on with Agrifoods will allow a2 Milk brand products produced by Canadian dairy farmers to rapidly gain exposure in Canada,” he said.

Agrifoods will establish distribution across the country and and has primary responsibility for funding this venture.

“This is an excellent partnership and we are excited to be able to offer a2 Milk products to Canadian consumers. The a2 Milk Company is an innovator in the dairy industry and we are delighted to be partnering with them,” Agrifoods Cooperative CEO Maheb Nathoo said.

The partnership will also help grow Agrifoods’ “overall market leading positions in specialty milks by offering consumers more choices for authentic, farmer owned, Canadian dairy products”, according to Tim Hofstra chair of Agrifoods.

The a2 Milk company is currently undertaking a search for its next CEO to replace Jayne Hrdlicka, who stepped down in December due to the role’s increasing travel requirements.

16 Mar, 2020
EG Group offer $27m for Oliver’s Real Food
Inside Retail

Oliver’s Real Food has entered into a scheme implementation deed with EG Group, after the petrol business offered to acquire 100 per cent of the company’s shares.

The $27 million offer amounts to a 53.8 per cent premium on the closing share price of 6.5 cents per share, landing at 10 cents per share.

EG’s bid comes just three weeks after it made an unsuccessful $3.9 billion cash and shares offer for Caltex Australia.

EG Group, or Euro Garages, went head-to-head with Canadians Touche-Card earlier this month in making a play for Caltex’s convenience store business and separate shares in a new, listed infrastructure and refinery company made up of Caltex’s remaining assets.

The Caltex board took legal and financial advice, and considered feedback from shareholders, before rejecting the offer.

Oliver’s chairman Nicholas Dower said the decision was made after extensive discussion with EG, and represents a significant premium on the business’ recent trading.

Last week Oliver’s announced it had slashed its half-year loss by two thirds to $3.65 million even as revenue slipped by 1.7 per cent, or $316,000, on account of reduced highway traffic during the summer bushfire crisis.

Earnings after one off items came in at $44, an improvement of $10.3 million from the same period a year ago.

The company did however cop $300,000 in impairments and paid $916,951 in directors’ options as it continues its rebuild after a rocky three years.

Oliver’s chief executive Jason Gunn, who founded the company in 2005, was removed from the firm in May 2018 by the same directors he had put in place to support the $15 million capital raising and listing process in 2017.

He returned to lead Oliver’s in March last year after it had stumbled through a series of disappointing results and profit downgrades, with many of its top brass jumping ship.

The company’s share price began to show signs of recovery as it stemmed its earnings bleed and closed unprofitable stores but Mr Gunn was forced to loan the business some of his own money last July as its cash reserves approached what it said would be a nadir.

In its HY20 result last week the company said Mr Gunn agreed to extend the repayment of his personal $420,000 loan to the company until March 2021.

The company was slapped with a six-week ASX suspension in November because it failed to lodge its full-year accounts on time.

10 Mar, 2020
Woolies delivers a high five before the storm
Brad Banducci has Woolies' five cylinders firing at once - for now. David Rowe

A bottle of gin, some cheap clothes, the Lion King and fewer shoplifters – it takes all kinds of ingredients to deliver the sort of result Brad Banducci has engineered at Woolworths. 

While the retail giant’s net profit for the December half was dragged down by its shameful – and increasingly expensive – underpayments scandal, the underlying performance of the group is impressive.

 

Indeed, Banducci has delivered something not seen at Woolies for years – sales and earnings growth across all five of its operating businesses.

In Australian food, strong sales growth, thanks in no small part to a Lion King collectables promotion, combined with a better result on stock loss (shoplifting and wastage) to push earnings before interest and tax up 8 per cent.

In the New Zealand supermarkets business, EBIT leapt 8.8 per cent, thanks to better fresh food sales and a Disney toy promotion.

In a good sign for the soon-to-be-demerged Endeavour Drinks business, its EBIT rose 6.7 per cent, with gin and vodka sales helping to offset weaker wine sales. The hotels business also shrugged off subdued trading during the early stages of Australia’s awful bushfire summer to post EBIT growth of 8.3 per cent.

And finally, for the first time since 2016, Big W actually managed to make a buck. EBIT came in at $50 million, a nice turnaround from a loss of $8 million in the prior period.

After what feels like five years of very hard graft, Banducci has managed to convert the sales growth momentum of the last 18 months into actual earnings; sales from clothing and tighter cost control saw gross margin jump 137 basis points to 32.6 per cent.

There’s almost always something going wrong in some corner of a big business like this – to have all five cylinders firing at the same time is no small feat.

After entertaining the idea that Big W might be better off in the hands of another owner, Banducci on Wednesday suggested a profitable and slimmed-down discount department store chain could play an important role in Woolies’ evolving view of what he calls the “retail eco-system”.

“It provides a number of additional categories that sit very comfortably with our food business.”

In a retail group whose fortunes are tied largely to the fate of the sluggish Australian economy, the group-wide result that Banducci has delivered is impressive. There’s almost always something going wrong in some corner of a big business like this – to have all five cylinders firing at the same time is no small feat.

Warning signs ahead

But Banducci won’t have much time to enjoy the December half. Woolworths cannot escape the early year air pocket the economy finds itself in.

The bushfires obviously hit stores right across the country, directly and indirectly. Volatile weather is weighing on sales of drinks. Increases in tobacco prices that came through late in 2019 are starting to bite, with cigarette sales down markedly in the first weeks of 2020.

And now coronavirus hangs over the economy, and Woolies.

Banducci faces two hits. The first is a disruption to supply chains, which is limited now, but could get worse into May and June; Big W, for example, is cautious about stock for its Mother’s Day sale and toy sale.

The second is sales activity. Already Banducci can see foot traffic in stores that cater to Asian consumers – and particularly Asian students – is already down, and clearly under close watch.

But Banducci says he won’t be cutting staff hours or dropping customer service levels to protect profits.

Having spent the first half making in-store changes to the way customers are served, and battling through the underpayments drama, Banducci does not want to take the foot off the investment accelerator for what he sees as one-off problems, not systemic ones.

“That means we still feel very comfortable with our plan. Our plan is to continue to focus on investing in the customer and the team,” he said.

“This is not the time we will be pulling back on this. But it is the time when we want to do a little bit less in our business and focus on execution.”

Underpayments shame may not be over yet

Woolworths’ underpayment scandal remains the shadow over the group. Having been back through five year’s worth of time and attendance records – it still has four to go – but the estimate of the amount owed to staff has risen from between $200 million and $300 million to $315 million, with $80 million of costs and interest on top of that, at a rate of 5.5 per cent.

The greater cost reflects the increasing shame that Woolworths must wear from this stuff-up. And it might yet increase if the Fair Work Ombudsman decides to pursue the group for penalties over what is the country’s biggest example of wage theft.

Banducci says he’s told his management team that hits to their bonuses are likely. “We’re committed to doing the right thing and we do expect consequences.”

 

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