News

22 Oct, 2019
David Jones opens first standalone food store in Melbourne
Inside Retail Australia

David Jones has launched its first standalone food store in Melbourne in a bid to lock down Australia’s gourmet grocery market and take share off Coles and Woolworths by offering fresher and, it argues, tastier prepared food. 

The 425sqm store, located on the ground level of Capitol Grand, a high-end residential and retail development on Chapel Street in South Yarra, stocks a large range of prepared meals, including a newly launched vegan range, alongside meat, eggs, dairy, fresh produce and other groceries and pantry staples, such as pasta, olive oil, tea and biscuits. 

Roughly 60 per cent of items in the store are private label, most of which were developed exclusively for David Jones by Inspired Foods, the Australian arm of Interfood, South Africa’s leading food supplier. 

According to Pieter de Wet, David Jones’ managing director of food, this partnership gives the retailer a competitive edge in Australia’s $110 billion grocery market, which increasingly is shifting towards fresh and prepared food. 

“Because of the long distances and supply chain issues in Australia, when [supermarkets] go into fresh, and I’m talking particularly about convenience and fresh meals, shelf life becomes a big issue,” de Wet told Inside Retail.

“You’ll find products deemed fresh have a shelf-life of 30 days, and then there’s no flavour, quality goes out the window.” 

In comparison, most of David Jones’ prepared meals have a shelf life of four to five days, he said. This is because Inspire Foods has developed different processes to prepare food without preservatives. 

“The IP we created over decades of working with our suppliers is what delivers those products, and over time, that’s what we see as a big opportunity that will differentiate us,” he said. 

Gourmet grocery not without risks

De Wet declined to say how many standalone food stores David Jones will open, but said the retailer aims to be the only national player in Australia’s underdeveloped gourmet grocery market. 

“If you look at other markets, there are one or two retailers occupying the top end of the market,” he said, pointing to M&S and Waitrose in the UK and Whole Foods in the US.

“In Australia, it’s a little bit different. It’s almost occupied by food service. You’ve got a couple independents, but nobody is doing it at scale and cohesively. There’s an opportunity there,” he said.

Gary Mortimer, an associate professor at Queensland University of Technology’s business school, agrees that the top end of the market is “ripe for exploitation”. 

“Such a strategy has proved successful in cushioning several international supermarkets from increased price discounting,” he told Inside Retail.

But it is not without risks. Woolworths closed down its gourmet grocer business Thomas Dux in 2017, and Brisbane-based Mercado slipped into voluntary administration in May.

“The key challenge is volume and selecting the right locations,” Mortimer said. 

Third tier of a $100 million food strategy

The store in South Yarra marks David Jones’ third food format since it announced its $100 million food strategy in 2017. 

The retailer over the past two years has opened food halls in its department stores in Sydney, Melbourne, Adelaide and Perth, where customers can dine on sushi and oysters and purchase gourmet food products between shopping for clothes and homewares, and in August, it announced a partnership with BP to offer fresh food and prepared meals in its service stations. 

The new store occupies a middle territory between these two formats. In addition to its grocery offer, it also features an in-house espresso bar and a pop-up shop from The Plant Society, where customers can buy freshly cut flowers, potted plants and accessories.

Going forward, de Wet said the retail will expand its food offer primarily through its partnership with BP and standalone stores like the one in South Yarra, rather than food halls.

“BP have got a massive network, the opportunity there is very big. If you look at M&S, they’ve got 400 BP stores in their network, there’s a real opportunity there for us,” he said. 

“How big this could become over time…time will tell.”

18 Oct, 2019
12 great ideas that will change how you treat mental health at work
SOURCE:
HRM Online
HRM Online

Events like R U Okay? Day are important in highlighting mental health, but we need to go beyond a single day. Here HRM presents 12 ideas – one for each month of the year.

It’s R U Okay? Day today The annual awareness day has sparked important (and often life changing) conversations about mental health and suicide prevention.

Last year, we published an article titled 'Hope you were okay?,' in an effort to highlight the fact that these conversations shouldn’t be confined to a single day.

In that spirit, here’s a wrapup of some of the mental health related articles we’ve published in the past. Looking to the year ahead, here are 12 resources, stories or pieces of advice (one for each month) that you can take back to your workplace.

1. Staying at work during poor mental health is sometimes best

We start with this very popular article from Fay Jackson, former deputy commissioner for the NSW Mental Health Commission and general manager of inclusion at Flourish Australia. Jackson recounts her experiences of dealing with her psychosis during work, and the three main things that help her: having supportive colleagues, having the option to remain at work during her recovery stages and implementing her ‘personal situation plan’ (more on that below).

2.  Creating a personal situation plan

Following the success of Jackson’s article above, HRM got in touch with her to take a deep dive into the process of creating and implementing a personal situation plan – a physical plan that you can pass on to a colleague or manager when you feel your mental health is slipping. 

While everyone’s plans will look different, Jackson shared some of the elements in her own plan and offered advice for HR professionals on best practice.

3. Identifying changes in behaviour

Ninety-three per cent of employees would rather lie to their managers and pretend they’re suffering from an “embarrassing” physical health condition (like food poisoning) than admit to experiencing a negative shift in their mental state, according to a report from Allianz Australia.

If you notice an employee has dramatically changed how they take personal leave, it might be a sign that you should reach out and check in.

4. Is the cause another employee?

If a staff member is suddenly becoming withdrawn, it’s natural to think they might have something going on in their personal life, but sometimes work or certain colleagues are the root cause. In our popular article on workplace gaslighting, we spoke with a psychologist about how to recognise workplace gaslighting.

5. Zero in on men’s mental health

It’s well documented that men often have a tougher time reaching out when going through poor mental health moments. This article breaks down the important steps HR should take to help their male workforce to break down barriers and do away with stigmas.

6. Physical health matters too

Encouraging staff to remain physically healthy can have a positive knock-on effect. This article looks at some interesting and unique ways you can incentivise your staff to lead a physically healthy lifestyle.

7. Mentally healthy workplaces don’t need to cost a lot

In a 2017 article, we outlined some cost-effective ways to cultivate a mentally healthy workplace, which in turn increases productivity and decreases turnover and absenteeism.

8. HR can make large-scale changes

For the final stage of her AHRI Practicing Certification program, Julie Dawson CPHR took her organisations fairly flimsy wellbeing program and transformed it into a proactive and useful, organisation-wide mental health strategy. Click through to see how she did it.

9. Reduce employee burnout

New research from Gartner suggests that a major reason people are thinking of quitting their jobs is because they’re burning out. With the World Health Organisation citing burnout as an “occupational phenomenon” earlier this year, it’s worth taking the time to identify and remedy stress levels in the workplace.

10. Learn from those who’ve been there

In 2017, we published a thought-provoking article from journalist Alan Stokes, who shared his experience of being on the verge of taking his own life and offered advice on how HR can take the lead on mental health strategies.

11. Learn how to talk about suicide at work

Suicide is an extremely tough topic to discuss in any scenario, let alone in the workplace. This article takes a deep dive into why this topic is an important one in demystifying the act and helping to prevent future acts from occurring.

12. Have a plan in place when things change

Often the work we do is a pillar of our sense of identity. When drastic changes occur in staff’s personal lives – for example, an accident that leaves someone wheel-chair bound or coming out as gay – our workplaces and managers need to make sure there are plans in place to ensure staff are able to transition back into the workforce and find their ‘new’ identity. People who’ve experienced shifting identities in the workplace share their stories.

17 Oct, 2019
Aldi China opens three more pilot stores
Inside Retail Australia

Discount grocer Aldi China has opened three more stores in Shanghai, taking its fledgling network to five. 

The three pilot stores come just four months after the German retailer made is Chinese debut.  They new outlets are located in Shanghai’s Putuo (pictured), Baoshan and Xuhui districts.

Aldi entered the Chinese market in 2017 through a flagship store on Tmall Global online followed by a Tmall Flagship Store last year. In June, the company opened its first two pilot stores in Shanghai’s Jing’an and Minhang districts and launched its WeChat mini-program.

Aldi is positioning its Chinese outlets as neighbourhood grocery stores. Features include in-house bakeries, fresh coffee and tea, imported wines from around the world, and fresh dairy products from Australia. 

Based on customer feedback and market research, all Aldi China stores now carry an increased range of imported products. Stockholdings differ from store to store depending on sales history and feedback.

“By tapping on its global network, Aldi brings a curated range of product categories including wine and liquor, snacks, beverages, fresh produce, ready- to-eat and ready-to-cook meals, personal care and pet-care products,” said a spokesperson.

All Aldi China pilot stores feature an integrated online-to-offline retail experience through the Scan-and-Go function on Aldi China’s WeChat mini-program and instant-delivery services to customers living within 3km of the stores. Customers who visit the stores can have their purchases delivered to within 5km of the stores, and consumers in the Yangtze River Delta can purchase products through the mini-program.

The grocer has also partnered with online platform Ele.me to offer delivery services to a wider range of customers across Shanghai.

14 Oct, 2019
Mars Wrigley brings all brands under one roof
Inside FMCG

Mars Wrigley Australia has revealed plans for a state-of-the-art  
warehouse in  
Truganina,  
West Melbourne, which will house all of the confectionery giant’s products under one roof. 

The 44,000 sqm temperature-controlled facility, which is expected to be up and running late next year, will have the capacity to house up to 49,000 pallets of products such as Mars, M&M’s, Snickers Skittles and Extra.

Automation is a key feature of the technologically-advanced facility, with Automated Guide Vehicles (AGVs) to assist workers with moving pallets around the warehouse.

“It’s an exciting project for our business and one that’s been several years in the making. This will be one of the most advanced warehouses in Australia, with Automated Guide Vehicles assisting our workers to increase warehouse flow, improve racking, and reduce handling – creating a safer working environment,” Marius Vermeulen, supply chain director at Mars Wrigley Australia said. 

“We’re looking forward to realising the benefits this new facility will deliver to our customers, our business and consumers through an enhanced customer service offering that will allow us to continue to share our much-loved brands with Aussie consumers today, tomorrow, and into the future.”

Mars Wrigley has partnered with Toll Group and Charter Hall on the construction of the new facility.

14 Oct, 2019
Walmart appoints new CEO in wake of Foran move to Air NZ
Inside FMCG

Walmart US announced John Furner as its new president and CEO, in the wake of Greg Foran’s decision to take up the chief executive role at Air NZ.

Furner will report directly to Walmart’s global president and CEO Doug McMillon when he takes up the position on November 1. Foran will stay with the retail giant until January 31 to help with the transition.

Furner began his career with Walmart in 1993 and went on to lead operations, merchandising and sourcing for Sam’s Club and Walmart International (China) as chief merchandising and marketing officer. 

“John has done a fantastic job at Sam’s Club, and he will continue the momentum we have in Walmart US,” McMillon said. 

“John knows our business well, having held many different jobs in the company over more than 25 years, and he is helping transform it for the future. He has the experience and judgment to know what we should continue doing and what we should change. He embraces technology and new ways of working, and he keeps our customers and Sam’s Club members at the center of everything we do, while delivering results for the business. I look forward to seeing his impact for our customers and associates in Walmart US.” 

Furner said he is grateful for the opportunity and ready to get started. 

“There’s no better place than Walmart U.S. to touch the lives of millions of customers and associates. Together with the team, we will build on the progress under Greg’s leadership and continue to make Walmart an even better place to work and shop,” he said in a statement. 

Foran said it has been an honour to lead the team at Walmart US. 

“I’m proud of what we’ve been able to achieve at a unique moment for retail and want to thank the associates who made it happen. It is bittersweet to leave Walmart, but this incredible opportunity to lead an iconic Kiwi brand was one I could not pass up, and I’m looking forward to this next chapter.” 

Walmart said that it will announce Furner’s replacement at Sam’s Club at a later date.

14 Oct, 2019
Egg farmers call on retailers to raise prices
Inside FMCG

A national body representing egg farmers has highlighted the impact of high grain costs and low returns on egg producers, saying the solution lies with retailers.

Melinda Hashimoto, CEO of Egg Farmers Australia, told Inside FMCG that 
grain costs are “by far the biggest cost” impacting egg producers and an increase in the retail price is needed to reflect changes caused by the drought. 

“There is currently no relief from the drought in sight. A reduction in grain harvested will impact purchases by egg producers across the nation as grain costs rise substantially, into the next season,” Hashimoto said.

“An increase in egg price from retailers is the only way that the industry can continue to be sustainable.” 

About half of all eggs are bought by consumers in supermarkets and grocery stores, while the rest goes to food manufacturers and food service outlets. 

“Egg producers have experienced increased angst over the past 12 months due to the pinch points along the supply chain. Retail prices have moved from $3 a dozen to $3.10 for caged eggs, $4.06 to $4.27 and free range from $4.87 to $4.95. Returns to producers do not meet the increased costs of day-old chicks and pullets as feed costs for hens have more than doubled in the past twelve months,” she said.

While major supermarkets in Australia have committed to phasing out caged eggs, Hashimoto says that supermarkets have not acknowledged the continual restructures the egg industry has undertaken without compensation. 

The body is working with supermarkets to help them better understand production costs across all systems to ensure a fair return.

Coles acknowledged the rise in grain prices and appears to be absorbing the cost of higher egg prices without passing them onto consumers. 

“An increase in grain prices as a result of drought has seen the wholesale price of eggs increase in recent months and Coles has accepted higher prices from egg suppliers,” a Coles spokesperson told Inside FMCG on Friday.

Woolworths said it is working with egg suppliers to offer affordable prices to consumers but didn’t indicate plans to increase the retail price. 

“Due to drought and high input costs, we’re currently seeing an impact on egg supplies across Australia. We’re monitoring the situation closely with our egg suppliers and working hard to ensure our customers have continued access to high quality eggs at affordable prices,” a Woolworths spokesperson told Inside FMCG

Similarly an Aldi spokesperson said that the retailer takes industry pressures into account when adjusting prices. 

“We support our egg suppliers impacted by drought and work collaboratively with them through long standing and stable agreements. These take into account challenges the market may be facing at any given time including surplus stock, shortages and cost pressures. We work with
suppliers to adjust prices when necessary based on these conditions,” the spokesperson said. 

Industry improvements

Australian Eggs commissioned the CSIRO to design a comprehensive research program over a three year period to provide the industry with a better understanding of community attitudes and drive continuous improvement within the industry. 

“Transparency is the cornerstone of building community trust and acceptance as people want access to accurate information to know how their food is produced or products manufactured,” she said. 

The body has committed that the Animal Welfare Standards and Guidelines for Poultry, currently under consideration, be mandatory. The approval of the standards and guidelines by agriculture ministers will pave the way for the standards to become state and territory legislation.

14 Oct, 2019
Kiwi who revived Walmart to be Air New Zealand CEO
Financial Review

Ex-Woolworths executive Greg Foran, the architect of the revival of US giant Walmart's US stores, is departing to run Air New Zealand, leaving a big hole at the world's biggest retailer on the cusp of the holiday season.

Air New Zealand chairman Therese Walsh. said: “We are thrilled to have attracted a world-class Kiwi back home."

Foran, who is in his late 50s, was largely responsible for whipping Walmart's core business into shape over the past five years by making its 4,700 stores cleaner and easier to shop in.

His efforts have led to more than three straight years of increases in quarterly same-store sales, the key metric in retail. But in recent months, tensions had emerged between Foran and Walmart's US online chief, Marc Lore.

"It's a big blow," Brian Yarbrough, an analyst at Edward Jones, said. "He's been instrumental to the turnaround and people actually give him more credit than than they do Doug. It's hard to fill his shoes."

John Furner, 45, was named to replace Foran, according to a statement. A close friend of Chief Executive Officer Doug McMillon, Furner started working at Walmart as an hourly associate in 1993 and rose to lead Sam's Club in 2017. He has international experience as well, previously running merchandising and marketing in China. The change will go into effect on November 1.

Furner has revitalized Walmart's warehouse division, Sam's Club, by consolidating its confusing array of private brands and beefing up its online business.

Walmart's US stores were in dire shape when Foran took over the US operations in 2014, after having served a stint in China. Stores were messy,with products out of stock, and Walmart was under threat from discounters like Dollar General and Germany's Aldi, whose prices were often lower. Foran invested billions in cutting costs on everyday items, and also ensured that the retailer's curbside grocery pickup service rolled out quickly.

Shares were little changed in late trading Thursday.

Foran will be CEO of Air New Zealand, which is 49 per cent-owned by the government.

11 Oct, 2019
Chemist Warehouse signs up for another two years with Tmall Global
Inside FMCG

Australian retail chain Chemist Warehouse is hoping to grow its market share in China and Southeast Asia by renewing its strategic partnership with Tmall Global for another two years. 

As part of the new deal, Chemist Warehouse will add more stores across Alibaba’s e-commerce marketplace, including one on its recently acquired cross-border marketplace Kaola, and three multi-brand stores on Tmall Global under My Chemist, My Beauty Spot and Discount Vitamin Warehouse. 

The retailer will also open a store on Alibaba’s Lazada marketplace to extend its reach to consumers in Malaysia and Singapore. 

“Since the previous deal signed two years ago, we have worked in partnership with the company to successfully grow their brand awareness in China. As Chemist Warehouse’s partnership with Alibaba matures, today’s agreement will see the company open additional stores and work with us on a range of new and exciting marketing initiatives,” Maggie Zhou, managing director of Alibaba Group in Australia and New Zealand said.

The agreement will also focus on providing easier market access and support for a number of smaller and medium brands.

Chemist Warehouse first collaborated with Alibaba’s cross-border business-to-consumer marketplace in 2015 and is now the number one cross-border store on the site. 

Nancy Jian, chief executive of Chemist Warehouse China told Inside FMCG on Tuesday that year-on-year sales for the Chemist Warehouse Tmall business is growing at 52 per cent with the main growth coming from beauty and the ‘mum and bubs’ category.

“We are very proud to build a group alliance on TMG platform. We are also helping several brands managing their flagship stores on TMG platform. By the end of this month, we will also be opening our first flagship store outside of TMG platform, but still under Alibaba group, on Kaola platform. I believe Chemist Warehouse flagship store will be the first brand expanding from TMG to Kaola this year since the integration,” Jian told Inside FMCG. 

“The exciting part for us is to continue growing our cross border business, not only in China, but hopefully soon in South East Asia. We are also opening our first brick & mortar store in China, it is a O2O self pick up store where consumers can actually shop in the store like a real Chemist Warehouse shopping experience.” 

The retailer then hopes to replicate this pilot store in other cities around China once it gets the formula right. Jian said the retailer wants to continue becoming the “easier gateway for brands to get into China”.

“Just like in Australia, we are here to make healthcare more affordable. In China, we would like to offer the same without compromising the service and quality,” she said. 

Jian said the key to Chemist Warehouse’s success is “quality, and authentic cross border products” with affordable pricing. 

She said the biggest brands now on Chemist Warehouse platforms are Bio Island, Swisse, Eaoron, Cenovis, Real Paw Paw,. spanning mum and bubs, vitamins, and skincare.

In 2015, having just opened the first store on Tmall Global, Chemist Warehouse became the first cross-border retailer in the world to achieve 10m RMB (AUD2.1m) in Gross Merchandise Volume (GMV) during Alibaba’s annual 11:11 Global Shopping Festival. The store currently stocks more than 200 brands and over 3200 Stock Keeping Units (SKUs). 

 

11 Oct, 2019
Fonterra welcomes Mercury NZ boss to new role of chief operating officer
Inside FMCG

New Zealand dairy co-operative Fonterra has appointed Fraser Whineray, chief executive of electricity company 
Mercury NZ, to 
the newly created role of chief operating officer. 

Whineray will join the management team in early 2020, after nearly 12 years at Mercury, and roles at Credit Suisse, Puhoi Valley Cheese and Carter Holt Harvey prior.

Fonterra CEO Miles Hurrell said the results-oriented leader will be a “great addition” to the management team.

“Fraser has demonstrated he can transform organisations to achieve growth in complex environments through a focus on innovation, customers and his team. He is motivated to contribute to New Zealand’s export success and to drive sustainability, innovation and efficiency in business – three strengths that we believe can create real value,” Miles Hurrell said on Tuesday.

Whineray began his career as a graduate of the New Zealand Dairy Board’s technical training programme and said he is looking forward to returning to the dairy sector.

“I am pleased to be able to continue in a role which contributes to New Zealand, and has strong, genuine relationships with many regional communities, Maori land trusts and local iwi across the country,” he said.

Whineray is the chair of the Prime Minister’s Business Advisory Council and holds a Post Graduate Diploma in Dairy Science & Technology from Massey University.

7 Oct, 2019
Record-low interest rates aim to boost spending
Inside Retail Australia

The Reserve Bank on Tuesday cut the official interest rates to a new record low of 0.75 per cent in a bid to drive up wage growth and reduce unemployment.

The new record low of 0.75 per cent is the third cut this year, and the first time rates have dipped below 1 per cent, but AMP chief economist Shane Oliver said the Reserve Bank’s work isn’t done yet.

“They want to get the economy humming faster, I don’t think this will be enough – it will help (though),” he told Sky News.

He predicted rates will drop again to 0.5 per cent on Melbourne Cup Day, and down to 0.25 per cent early in 2020.

Executive director of the Australian Retailers’ Association Russell Zimmerman said he was hopeful the decision to further cut interest rates would boost retail sales by easing pressure on household budgets.

“We haven’t seen the jump in retail sales we were hoping for, and we are still waiting to see the flow-on effects of earlier rate cuts, tax cuts, and increases to the minimum wage,” Zimmerman said.

“Retail trade figures in recent months have continued to lag but we keenly await the release of August retail trade figures to see whether the other stimulatory measures have kicked in,” he added. 

Divide over how to boost economy

Treasurer Josh Frydenberg said the RBA cut rates to bring Australia into line with other low-rate economies, as well as to pursue its goals of cutting unemployment and lifting wage growth.

“The board has made clear in its statement today the domestic economy has reached a gentle turning point and they positively referred to the benefits that are flowing from the tax cuts, which are the most substantial in more than two decades,” he told reporters in Sydney.

But Labor shadow treasurer Jim Chalmers said the government was pretending it had no options to lift the flagging economy.

“If they were so good at managing the economy the Reserve Bank wouldn’t have had to cut rates again today,” he told reporters in Brisbane.

Deloitte Access Economics partner Chris Richardson says there are downsides to cutting rates so low.

“There is a risk that we’re spending down our recession insurance,” Richardson told Sky News before the cut was announced.

Frydenberg said the best way to avoid recession in a future global downturn was to pay down debt, giving the government more capacity to spend through it.

Banks urged to pass on rate cut in full

The Australian Chamber of Commerce and Industry urged the banks to pass on the rate cut in full to lift spending on retail.

“Small businesses have been doing it tough over the past year. This has particularly affected discretionary spending in small retail businesses, including cafes and restaurants,” chief executive James Pearson said.

The Commonwealth Bank was the first of the big four banks to trim its interest rates in response to the RBA’s move.

However, while CBA cut its standard variable rate for home loan customers by between 0.13 and 0.25 per cent it did not match the RBA’s cut completely.

The other big banks are expected to follow CBA’s lead in the coming days.

7 Oct, 2019
Mars Wrigley Australia appoints Andrew Leakey as new GM
Inside FMCG

Mars Wrigley Australia has announced Andrew Leakey as the company’s new general manager, as Andrew Loader departs the business. 

Leakey will be based at the Mars Wrigley’s headquarters in Melbourne and will oversee the manufacturing facilities in Asquith (NSW) and Ballarat (VIC) and the 17 confectionery brands including Extra, Maltesers, M&Ms, Mars, Skittles and Eclipse. 

Having worked with the business since 2008, he returns to Australia having held roles in Asia and the Pacific, as well as the general manager position at Mars Wrigley India, where he oversaw double digit growth. He also was the head for the Australian, New Zealand and Pacific Islands operations from 2011-2016, and as marketing director launched the award-winning EXTRA “Eat. Drink. Chew” campaign.

“It’s great to be back in Australia, leading a business with a strong legacy of market leading brands, great Associates, strong customers and passionate consumers. For over 100 years, Mars has remained committed to local manufacturing in Australia and this year we’re looking forward to celebrating the 40th anniversary of our Ballarat site with our customers and consumers,” Leakey said in a statement.

Andrew Loader, vacates the general manager position after almost 20 years to support new and emerging businesses and the development of young leaders.

7 Oct, 2019
G&M Cosmetics takes on P’URE Papaya Care to grow exports into Asia and Europe
Inside FMCG

Australian skincare export brand G&M Cosmetics has acquired P’URE Papaya Care skincare in a move which will help increase G&M’s footprint in both local and export retail markets.

Zvonko Jordanov, managing director and founder of G&M Cosmetics told Inside FMCG that the acquisition will complement G&M’s business and support customer calls for vegan and certified natural products.

“We looked for a business with complimentary distribution channels that could expand our current network and customer base. P’URE Papaya Care skincare range has strong distribution in Europe whereas G&M Cosmetics has a strong network within Asia,” Jordanov said. 

“This partnership is going to help us both expand into different channels, locally and internationally. The P’URE Papaya skincare range contains complimentary products to our current portfolio, so this acquisition diversifies our growing product offering and will help increase our customer reach.”

The Sydney-based family beauty business has a presence in over 35,000 retail locations worldwide. 

In the last decade it has seen a dramatic rise in exports especially into the Asian market. Its Australian Creams brand was voted the Most Trusted Australian Brand in China in the 2018 Australian Brands in China Index. The company’s products can be found in more than 30,000 retail outlets in China including Walmart China, Carrefour Supermarket, Vanguard Supermarket, Lotus Supermarket, Grandbuy, and Nepstar DrugStore Pharmacy. 

“One of the points of difference and the key to G&M’s success in the export market has been that the focus on high grade, natural Australian ingredients such as Eucalyptus Oil, Lanolin, Emu oil, Macadamia Oil, Tea Tree Oil and Kakadu plum. Using these products at the front and centre of our packaging rather than focusing on our brand name has made a difference,” Jordanov said.

“As well as operating our own Tmall flagship online store, it is this mix of offline and online models that has been one of the key success in the China market.”

Over the last few years the company has also exported to markets in Asia like Hong Kong, Singapore, Taiwan, Thailand, Vietnam and Malaysia and now entering Philippines and Indonesia.

“We are always looking to innovate our products and brand offering and tailor make them to suit the needs of our customers both locally and overseas,” Jordanov said. 

G&M Cosmetics will manufacture P’URE Papaya Care skincare range in its own Sydney factory to maintain full control of the production process.

7 Oct, 2019
Coles seeks sales edge with Australia's first 'grocerant'
Financial Review

Coles has opened Australia's first 'grocerant' – a food hall in a supermarket – after establishing partnerships with independent food retailers to augment its in-house convenience foods range.

Coles customers will be able to dine on sandwiches, salads or hot food bowls from cult Melbourne-based food chain EARL Canteen or snack on freshly made sushi and Japanese-inspired sliders from national chain Sushi Sushi while picking up their groceries.

"It means for breakfast, lunch and dinner we have all the bases covered," chief executive Steven Cain said on Wednesday after unveiling the first "grocerant" - a combination of the words grocery and restaurant - at the retailer's newly refurbished flagship store at Tooronga in Melbourne.

Mr Cain is aiming to accelerate Coles' same-store sales growth, which has lagged that of Woolworths for 10 of the last 11 quarters, by tapping demand from time-poor consumers willing to pay more for convenience.

Mr Cain believes the convenience strategy will enable Coles to generate an additional $1 billion in sales over the next five years, mostly by taking sales from other players in the convenience food market.

Coles is on track to introduce the expanded convenience range into 100 supermarkets before Christmas and plans to incorporate elements of the offer in about 200 stores over the next one to two years.

Convenience foods rollout

Mr Cain says elements of the new food hall concept will be incorporated into the 20 new stores Coles plans to open each year and the 50-odd stores due to be refurbished annually.

"We'll need to evaluate each of the new concepts like we did at Pagewood," he said.

"In terms of what we have done in [Tooronga] we'll let it trade though Christmas and see how each of the concepts fares.

"But the good thing is because we're rolling out 20 new stores a year and more than 50 renewals a year it gives you a platform to slot this in and as things become successful we'll roll it into future and renewal stores."

The former Asda and Metcash executive believes customers will feel comfortable eating breakfast, lunch or dinner in a supermarket as long as the food is good and the ambience is right.

The 'grocerant' concept takes a leaf out of the playbooks of US and UK retailers such as Waitrose and Eataly, which enable customers to dine in while they shop for groceries.

Coles has its own commissary kitchen, which makes ready-made and semi-prepared meals that consumers can eat on the go or take home.

Rather than attempting to prepare made-to-order foods such as sandwiches, Coles decided to partner with independent food retailers.

"If we think there's customer demand for a product it's often best to work with a black belt than doing it yourself," Mr Cain said.

"It's a bit like the technology partnership with Ocado and Witron -  if you think someone is so far advanced you're best partnering with them than reinventing the wheel," he said.

"Things like sushi and all-day dining options are quite challenging operationally and that's why we've teamed up to make sure the combination of what we're doing, which is more on the ready meals side, and what they're doing, which is food to order, comes together seamlessly in-store."

Coles plans to collaborate with other independent food retailers as it rolls out the  'grocerant' concept across Australia.

"There are a lot of people who do want to work with us, it's finding the right concept and the right commercial terms," Mr Cain said.

Coles shares have risen 34 per cent this year, reaching a high of $15.55 this week, underpinned by demand from investors hungry for dividends.

2 Oct, 2019
Coles nears $300m of asset sales
Australian Financial Review

Coles has sold a brand new neighbourhood centre it anchors in south western Sydney  for $34.8 million and a shopping centre development site in Newcastle for $8.9 million as it builds towards $300 million of property divestments.

The supermarket group and its main rival Woolworths are both divesting newly-built shopping centres as part of a capital recycling strategy that takes advantage of the strong investor market for non-discretionary retail assets.

The Willowdale Shopping Centre in Denham Court west of Liverpool  - part of a Stockland residential community, - sold on a yield of 5.6 per cent to Willowdale Shopping Plaza Pty Ltd, whose investors include Tan Cuong Tran and Li Ley Tran from Hunters Hill and Shufen Huang of Forest Lodge.

Coles paid $7 million for the 2.26 hectare site in 2015.

In the second deal, Coles Mayfield, a 1.4 hectare Coles-anchored neighbourhood shopping centre development site in Newcastle, sold for $8.9 million to a local investor.

Coles has sold at least $240 million of neighbourhood shopping centres in the last two years with that figure to exceed $300 million when it divests Coles Amaroo Village in the ACT for about $30 million.

Coles chief property officer Thinus Keeve told The Australian Financial Review recently the grocery giant was not a property company, but had a strategy of developing shopping centres where there is population growth and then recycling the capital for the next opportunity.

"Greenfield sites are a long-term opportunity for Coles to unlock a retail development and when that site matures, it's time for us to move on and when we have secured the right retail outcome we recycle the capital," he said.

Willowdale Shopping Centre was sold by James Wilson and Alex James-Elliott of Colliers International.

James Wilson and Chris Chapman of Colliers International sold Coles Mayfield.

“We are seeing an exceptional depth of the market with an extremely solid appetite for strong performing retail assets within capital city locations, with interest in assets featuring income secured by national ‘nondiscretionary’ retailers, such as the highly prized Coles supermarket covenant,” Mr Wilson said

Willowdale Shopping Centre sold fully leased with a weighted average lease expiry of over 11 years, anchored by a Coles and Liquorland.

The Coles Mayfield development site is located just 4km from the Newcastle CBD and included development approval to build a neighbourhood shopping centre and agreement for lease for a full line Coles supermarket and Liquorland store.

Earlier this month, private investors snapped up two Coles supermarkets and a Kmart in Melbourne's Northcote Plaza for around $60 million in total, with the deals struck on yields below 5 per cent. 

2 Oct, 2019
Treasury Wine eyes spin-off of cheaper labels
Australian Financial Review

Treasury Wine Estates chief executive Mike Clarke says potentially spinning off the group's cheaper commercial-wine operations from the higher-end business led by Penfolds is under consideration, but needs the catalyst of a large acquisition to be triggered.

Treasury generates about 30 per cent of its $2.8 billion annual sales from lower-priced commercial brands led by Lindemans, Blossom Hill and some of the lower-tier Wolf Blass labels.

"Demerger is still on the cards if we do the right M&A,'' Mr Clarke told an investor day briefing on Tuesday.

The mid-market and higher-end brands deliver a return on investment between two to four times higher than the commercial portfolio.

Costs are rising for all players in commercial wine, but he said Treasury was in a very strong position with a global platform in both commercial wine, and higher-end wines, and was being patient.

"We probably should have done it three years ago,'' Mr Clarke said when asked why it wasn't already part of consolidation in commercial wines.

He said the trigger would need to be a large M&A deal where the acquired company's commercial wine business would be meshed together with Treasury's own lower-priced commercial wine business and potentially spun off to shareholders.

Treasury's higher-end operations, led by Penfolds, Wynns and Seppelt, could benefit from the addition of other prestige brands that might come into the fold from the same acquisition as the company looks to benefit further from a trend toward higher quality wines worldwide as consumers traded up.

It comes as ownership reshuffles are about to accelerate in the wine industry, with French drinks giant Pernod Ricard having put its global wine operations up for sale. That includes the big-selling Jacob's Creek brand made in South Australia's Barossa Valley, St Hugo, and New Zealand brands Brancott Estate and Stoneleigh. Private equity group TPG Capital has been closely scrutinising potential deals in the sector, with a large focus on commercial wine businesses.

I think it is very important that we don’t become used as a pawn in a political debate between two countries

— Treasury Wine Estates chief executive, Mike Clarke

Counterfeit crackdown

Mr Clarke also said there was a huge focus on cracking down on counterfeit products in China, where Penfolds has been a huge success and the main reason that Treasury's profits soared 43 per cent to $293 million in the year ended June 30. The company outlined the full extent of the issue as it tries to stamp out the proliferation of copycat products.

There had been 158 raids in China in the past year, more than 80 arrests, 43 criminal sentences, and 20 court underway. "It's a problem that's never going away unfortunately,'' he said.

He said a doubling in sales force in China, where Treasury uses a different model to most rivals and goes direct to retailers rather than through distributors, delivered a potent extra leg in enforcement as well as being a revenue driver and bringing better margins.

"They have a good idea of what's going on,'' he said, referring to the on-the-ground presence of more sales people in stores and warehouses as Treasury prepares to double its reach in China to 200 cities.

Tom King, Treasury's managing director of North Asia, told the briefing that about 20 per cent of all wine in China was now sold via e-commerce channels, with Millennial customers increasingly coming into the wine category through online purchases.

Mr Grape

But online sales were typically lower margin than through other channels. Treasury's Rawson's Retreat brand is pitched as an entry-level wine in China, with a heavy marketing push being made using a "Mr Grape'' character.

Mr Clarke had been looking at potential structures to spin off the commercial operations in 2015 and 2016, but the urgency then waned because profits had been rising in the commercial segment and costs had been taken out.

"We've got a more profitable core commercial business,'' he said. Blossom Hill, one of the biggest-selling brands in the UK, came into the stable as part of the $754 million acquisition of Diageo's US wine business.

But he said on Tuesday a demerger was still a serious option as part of a bigger M&A deal if Treasury could find the right transaction.

"That still makes a huge amount of sense,'' Mr Clarke said.

Penfolds is irreplaceable

Mr Clarke also told investors that Treasury was very conscious of the political situation as tensions over China grew. Penfolds is the main profit driver for Treasury but it was important to note there was no home-grown Chinese brand capable of replacing Penfolds in that market, he said.

"They don't have that substitutability in China,'' he said. He used the example of Apple iPhones and Huwaei phones, where Huwaei was a homegrown brand in China.

He said it was crucial to Treasury that Penfolds didn't become caught up in any fallout from political tensions.

"I think it is very important that we don’t become used as a pawn in a political debate between two countries,'' he said.

Mr Clarke said Prime Minister Scott Morrison had been very adept in finding the right balance and he had ''been watching ScoMo in action for the last five days in the US and, so far, touch wood, great scorecard.”

Treasury Wines will spend as much as $180 million over the next two years expanding the production capacity at Bilyara winery near Stockwell in the Barossa Valley in South Australia by one third, to help provide the extra stock required to keep up with strong demand into China.

2 Oct, 2019
Fonterra offloads stake in DFE Pharma for NZ$633m to reduce debt
Inside FMCG

Dairy giant Fonterra is selling its 50 per cent stake in drug supplier company, DFE Pharma for $NZ633 million ($A589 million) in a bid to further reduce debts.

The sale to a fund managed by CVC Capital Partners, along with proceeds from other asset sales including $NZ380 million for Tip Top, will bring Fonterra’s debt reduction efforts to over NZ$1 billion.

Fonterra chief executive Miles Hurrell said the company is ready to rebuild now after incurred losses worth $NZ196 million loss in FY19. The dairy giant set a $NZ800 million debt reduction target for the 12 months to July 31.

“A year ago, we started a full portfolio review to re-evaluate every investment, major asset and partnership, to make sure they were still right for the Co-op. In March, we advised that we were reviewing our share of DFE Pharma, a 50% joint venture with Royal Friesland Campina. DFE Pharma was identified for sale due to the substantial capital required for its future growth,” Hurrell said in a statement.

“We set ourselves a tough initial target for debt reduction and we are pleased with the progress we are making.”

Last month, the dairy giant said it was expecting a second consecutive full-year loss between $NZ590 million to $NZ675 million, attributed to “significant adverse” one-off adjustments including a $NZ70 million write-down of its Australian business due to the drought.

“We are now at the end of that process and have sold our share of DFE Pharma to CVC Strategic Opportunities II, a fund managed by CVC Capital Partners, a leading private equity and investment advisory firm, managing approximately US$83 billion of assets in 73 companies worldwide,” added Hurrell.

2 Oct, 2019
Kiwi honey producers try to jump Australia
Inside FMCG

The New Zealand government is supporting an industry push to trademark manuka honey in China and shut Australia out of the market.

Manuka honey is a highly-prized commodity across the world, particularly China, for its antibacterial properties as well as consumption.

The honey is produced in southern Australian states and New Zealand where bees gather the nectar of the manuka tree. While manuka honey is produced on both sides of the Tasman, the NZ industry is shooting for a monopoly into the lucrative Chinese market.

Kiwi producers are to apply to the Beijing Intellectual Property Court to obtain the Chinese certification trade mark that would link the manuka name to New Zealand alone, Nine newspapers reported.

If successful, Australian producers would need to market under a different name – despite it being from the same source. New Zealand trade minister David Parker said the application carries the government’s support, despite likely protests from Australia.

“If it is so entitled, then there’s nothing wrong with the industry protecting its intellectual property. It’s a matter of law as to whether it’s entitled to that intellectual property protection. That will be a matter of law for… the regulator in New Zealand and China,” he told AAP.

The New Zealand government has pointed to honey in recent weeks as a notable industry experiencing export growth, most recently by Prime Minister Jacinda Ardern while in Japan last week. The Kiwi industry is considered further advanced than its Australian counterpart. The chairman of the Australian Manuka Honey Association, Paul Callendar, has urged the Australian government to intervene.

“The New Zealand government is involved. This is a major trade issue and the Department of Agriculture and the Department of Trade have got to get involved,” Callander told Nine newspapers.

2 Oct, 2019
ACCC to decide on Saputo Lion cheese bid
The Australian Business Review

The ACCC is due to decide on Thursday whether to let Canadian dairy giant Saputo proceed with its proposed $280 million purchase of the Lion specialty cheese business.

Some in the trade suggest the purchase will be subject to the divestment of Saputo’s Smithton plant in Tasmania.

The market is already highly concentrated, with Fonterra controlling 55 per cent of the state’s dairy production. Saputo, through its Murray Goulburn acquisition, holds 15 per cent of the market, while Lion has 10 per cent. The rest shared by smaller players and food giant Mondelez.

The acquisition will give Saputo control of Lion’s King Island dairy and plant, as well as its Burnie plant.

Last year the ACCC let Saputo buy Murray Goulburn, subject to sale of the Koroit plant near Warrnambool in Victoria.

Saputo is the world’s biggest cheese producer with strong market share in North America.

Tasmania accounts for around 10 per cent of the Australian dairy output.

2 Oct, 2019
Retail Food Group pitches $160m-plus equity raising to investors
The Australian Financial Review

Retail Food Group is pitching a $160 million-plus equity raising to fund managers.

It is understood Retail Food Group has been meeting institutional investors in recent days, testing their appetite for what would be a big recapitalisation of the company.

Stockbrokers Shaw and Partners and Petra Capital are involved as lead managers, sources said.

It is understood RFG wants to raise at least $160 million to repay debt and provide funds for management's plans to refocus the business on its core retail food franchise and coffee operations.

The mooted raising is about five-times Retail Food Group's market capitalisation.

The company had net debt worth $259.7 million as at June 30, which was worth more than five-times underlying EBITDA recorded in the 2019 financial year.

Fund managers are trying to work out whether Retail Food Group management are able to cut the company free from recent issues, both operational and financial, or whether it has become too toxic to ply fresh funds into.

The company has made changes to its executive team and board, including the appointment of ex-PMP Ltd managing director Peter George as executive chairman.

The mooted raising comes after Retail Food Group had been in talks with special situations firm Soliton Capital Capital, which put its own $165 million recapitalisation proposal to the company a few months ago.

RFG, which is listed on the ASX and franchises brands including Michel's Patisserie and Donut King, has been in talks to sell a number of assets or refinance its debt in recent months. 333 Capital is advising RFG.

 

 

 

2 Oct, 2019
Wesfarmers chairman swings back at government over role of business
SOURCE:
The Age
The Age

Wesfarmers chairman Michael Chaney has taken a thinly veiled swipe at the federal government over "continued debate and commentary" on corporate governance, sustainability and the role of businesses.

Treasurer Josh Frydenberg last month challenged corporate Australia to reduce the number of dividends and share buybacks it awarded to shareholders, instead pushing businesses to reinvest and boost the economy.

Senior members of the government, including Prime Minister Scott Morrison, have also suggested companies should focus less on social and environmental issues.

Though Mr Chaney did not reference the Treasurer's speech, he addressed commentary "that Australian companies focus too much on dividends and capital returns", saying it represented a misunderstanding of corporate finance.

"The misunderstanding is that a company is limited by capital rather than by investment opportunities; and that there is a trade-off between dividends and capital investment. Neither is true," he said.

"For large companies in particular, capital is effectively unlimited, except perhaps during rare times of crisis. At almost all times, debt and equity markets are only too willing to provide capital for good investments. The challenge is to find them."

 

''At almost all times, debt and equity markets are only too willing to provide capital for good investments. The challenge is to find them.''

Wesfarmer chairman Michael Chaney
 

Instead, Mr Chaney attributed Australian companies' high rate of dividend payout to this country's franking credits policy, saying responsible companies returned those credits to shareholders.

The issue of making capital investments was "entirely separate", he said, with good investments "few and far between".

"The high rate of corporate tax and modest investment allowances in Australia are relevant issues here," he said.

Mr Chaney, a former president of the Business Council of Australia, also referenced the recent debate about whether companies had a purpose beyond providing returns to their shareholders.

"Since we listed on the stock exchange in 1984, our annual report has made very clear the necessity of considering all stakeholders," he said.

"If a company does not maintain that focus, customers will desert it, employees will leave and potential partners will decline to do business with it."

The Perth-based retailer also announced the retirement of non-executive director Tony Howarth, one of the company’s longest-serving board members.

Wesfarmers managing director Rob Scott will be paid $6.75 million for the last financial year after receiving over 85 per cent of his available bonuses.

The company's annual report released on Wednesday showed Mr Scott’s base pay was $2.35 million. That would be boosted by an additional $3.91 million in share-based payments.

Mr Scott’s pay was only slightly up on the $6.55 million he received the year prior, due to changes in the company’s issuance of performance-based incentives following the dermerger of Coles last year.

Coles' current chief executive Steven Cain, who moved across from Metcash to run the supermarket giant, was paid $345,795 for the two month period between September and November 2018 where he was part of Wesfarmers' key management personnel.

Including this amount, Mr Cain's pay will still be less than Mr Scott's as he pockets $5.4 million for his first year at the helm of the retailer, including a $2.4 million transition fee from Wesfarmers to compensate him for his move from Metcash.

However, both chief executives' pay combined will still be less than Woolworths boss Brad Banducci, who's lengthy tenure at Woolworths saw him awarded $6.9 million in long-term incentives, which contributed to a total of $12.6 million in remuneration last financial year.

Bunnings managing director Michael Schneider also pocketed $2 million in share-based payments on top of his $1.39 million salary.

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