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The proportion of Australians who consume alcohol has increased since the pre-pandemic period, says market research company Roy Morgan.

In the year to March, 13,709,000 Australians – or 67.6 per cent of people aged 18 years and over – consumed alcohol in an average four-week period when compared to 66.3 per cent in the year to March 2020.

The increase is driven by the ready-to-drink (RTDs) category which registered an increase in consumption from 10.8 per cent pre-pandemic to 20.8 per cent now.

Consumption of wine, the most popular alcohol during the pandemic, has increased from 41 per cent pre-pandemic to 43.9 per cent in the year to March.

Meanwhile, beer has lost the momentum it had gained during the early stages of the pandemic. Now, fewer than a third of Australians – or 32.2 per cent – consume beer, down from 37.6 per cent pre-pandemic.

Spirits consumption has also recorded a meagre decline of 27.5 per cent from 28.7 per cent pre-pandemic.

Roy Morgan CEO, Michele Levine, said alcohol consumption amongst the Australian population is now “reasserting itself”.

“The standout performer of the last few years has been RTDs which have kept increasing despite the ending of lockdowns and all pandemic-related restrictions,” said Levine.

“The emerging trends suggest consumption of wine and spirits looks set to return to pre-pandemic levels while RTDs such as vodka, gin, bourbon and rum have been on a sharp rise in recent years and that trend could well continue at the expense of beer consumption which has continued its long-term decline.”

Australian confectioner Ernest Hillier Chocolates has appointed voluntary administrators to sell off its business and related entities.

Established in 1914, the company is Australia’s oldest chocolate brand and operates a manufacturing facility in Coburg, Victoria. Its Ernest Hillier and Newman’s brands have been stocked across supermarkets for many years.

Administrators Alan Walker and Glenn Livingstone from WLP Restructuring Partners are seeking urgent expressions of interest from interested parties who could recapitalise or acquire the business’ assets.

Partner Alan Walker, said it is “unfortunate” that such a “storied” chocolate brand has encountered distress amid rising operating costs.

“We are working closely with all affected parties as we move with urgency to understand the business’s affairs and find a suitable buyer or investor.

“While this process is underway, we have had to make the unfortunate decision to cease manufacturing activity and stand down employees at this stage.”

He added the brand’s existing relationships with large multi-national food and beverage providers alongside its supply agreements may “appeal to potential suitors”.

The first statutory meeting of creditors will be held on June 30.

Metcash boss Doug Jones says IGA stores are taking the fight to Coles and Woolworths, offering Australian households a “real value” alternative to the two supermarket giants.

Jones said successive interest rate rises and increasing grocery prices had started to affect shopper behaviour, with IGA well-placed to capitalise on customers looking for better deals and a wider range of products.

“We think our network offers real value when it comes to products, [as well as] well-staffed and very enticing deli areas – we think that stands us in very good stead,” he said.

“The customer value proposition in an IGA is fundamentally different. The community-based store resonates with Australians. Because the managers or the owners are from and of the community, they often source products that are particularly relevant to their local communities.”

Shares in the ASX-listed grocery wholesaler shot up as much as 8 per cent on Monday after it beat market expectations with a 7.6 per cent jump in profits to $259 million in the 12 months to April 30.

Metcash’s full-year revenues increased by 6.2 per cent to $15.8 billion, with the company reporting it had managed to hold on to most of the shoppers who relied on local IGA supermarkets during the COVID lockdowns.

“As they’ve rediscovered their community stores, they have really liked what they’ve seen,” Jones said.

As the battle for consumer wallets intensifies, he said Metcash wanted to remind shoppers that there was choice in the grocery sector beyond the major supermarkets.

The company’s management says IGA has made significant progress narrowing the product price gap between itself and its competitors over the past two years, and has expanded its price match program to put hundreds of products in line with Coles and Woolworths shelf pricing each week.

Metcash is also competing against retail giants in the hardware and liquor spaces, through its operation of brands such as Total Tools, Mitre 10, Cellarbrations and The Bottle-O.

The company’s hardware sales jumped by 10.6 per cent to $3.4 billion for the year, and are now the biggest contributor to overall earnings before tax, making up 42 per cent.

Jones said that while home building trends were starting to normalise, growing demand for smaller renovation programs benefited the business given its focus on serving small and medium building customers.

Metcash’s DIY business, which accounts for about one-third of its hardware segment, was also staying competitive on product pricing.

“We want to remind shoppers that there’s a choice – and we recognise that like in food and liquor, they have a choice as to how they manage their budgets. We want to be part of their choice set.”

MST Marquee analyst Craig Woolford said the latest numbers represented a resilient performance from the company.

“Metcash has delivered a solid FY23 result and demonstrated it has retained the majority of its customer wins during COVID,” he said in a note to clients.

IGA owner Metcash says sales across all retail pillars remain “strong” and the business is actively managing increased cost pressures.

For the year to April 30, group revenue rose 6.2 per cent to $15.8 billion while underlying tax-paid profit was up 4.6 per cent to $307.5 million.

Group CEO, Doug Jones, said both sales and earnings were at “record levels” as the business continued to face additional challenges associated with rate increases and cost of living.

“Our focus on further improving the competitiveness of our independent retail networks, as well as the success of our strategic acquisitions, particularly Total Tools, have been key factors in the strong performance.”

Total food sales grew 2.8 per cent to $9.6 billion on a normalised basis while supermarket sales rose 2.1 per cent and convenience store sales were up 9.7 per cent.

Liquor sales grew 8.3 per cent to $5.1 billion driven by strong demand “buoyed” by improved competitiveness, a preference for local shopping and at-home consumption trends.

The business opened 39 new IGA stores during the year and says it is “well positioned” to deliver growth and superior returns to shareholders.

For the first seven weeks of FY24, group sales have improved by 2.3 per cent, however, ongoing interest rate hikes have impacted consumer confidence across its retail networks.

It’s time to take the makeup off at Sydney private equity firm Crescent Capital Partners.

Street Talk can reveal Crescent has mandated Ankura Consulting Australia to find a buyer for its beauty and makeup business, Nude by Nature, after nearly a decade of ownership.

Nude by Nature lays claim to being Australia’s No.1 mineral makeup brand that rings up a sale every 27 seconds from the range. Its product offering covers the whole gamut – foundations, BB cream, mascaras, brushes – and is marketed as 100 per cent clean and natural.

Despite its clean-ingredients push, it’s not a niche player but rubs shoulders with juggernauts like L’Oréal in the makeup aisles of Chemist Warehouse, Priceline, Myer, Target, Big W and 1200 independent pharmacies in Australia and New Zealand.

The homegrown business is the fifth-largest seller at pharmacies – behind multi-nationals Maybelline, Revlon, L’Oréal and Rimmel – where nearly 45 per cent of the population does its cosmetics and beauty shopping.

Its mineral foundation sells for $42.95 a pop, while brushes start at $16.95 on a full-price basis. It claims to be “cleaner” than higher-priced competitors and is ready to be scaled up locally and overseas, according to the sell-side pitch.

Ankura is preparing Nude by Nature for a 100 per cent sale, and would take expressions of interest before commencing the sale process.

Slap on the lipstick, COVID is over

Crescent Capital Partners has pressed play on the sale as discretionary retail straddles a tricky divide – on one side, sales in categories like makeup and movie cinemas are recovering from lockdowns but on the other, rate hikes are being tipped to force shut shoppers’ wallets again. The PE firm has also redrawn it territory to become a leader in healthcare assets. 

The preliminary sales pitch has urged prospective buyers to think of Nude by Nature’s double-digit EBITDA margins (detailed financials were not offered at this stage), track record of growing profitably, large footprint and future growth opportunities.

The latter, it said, would come from pushing further into digital channels and new geographies.

Nude by Nature’s chief executive officer Mark Thompson, who has been in the role since 2014, sees merit in launching again into China and is preparing a US foray in the 2025 financial year. The management has experience in taking its products global, and is already driving revenues from launches in Canada’s Shoppers Mart and Europe’s Nocibé, Douglas and Karstadt.

Lastly, it has a pipeline of products ready to launch, including colour cosmetics, clean baby care and teen-focused products, prospective new owners were told.

As a comparable deal, Melbourne-based high-end skincare brand Aesop fetched a $US2.53 billion ($3.7 billion) enterprise valuation in a sale to L’Oréal in April. Aesop made $US537 million in fiscal 2022 and had its highest-ever profit margin at 25 per cent at the time of the sale.

Infant formula maker A2 Milk has scored a win in on one of its most lucrative markets after the company’s contract supplier, Synlait Milk, was approved by China’s market regulator to continue selling its China label infant milk formula product.

On Tuesday, A2 Milk announced that China’s State Administration for Market Regulation had renewed approval for Synlait to manufacture stages one, two and three infant formula products after its previous registration only got a bridging extension in February pending the regulator’s decision.

It comes after infant formula sold in China underwent a regulatory process to meet the country’s more stringent food safety rules, known as GB standards, with the renewal to be valid until September 2027.

A2 Milk said production was expected to begin later this month at New Zealand-based Synlait’s Dunsandel facility, and that its products would transition to the market in the first half of 2024.

The company’s chief executive David Bortolussi said the approval by China’s market regulator would provide A2 Milk with continued access to China’s substantial domestic infant milk formula market, which remained a key focus of the firm’s growth strategy.

“We look forward to making our upgraded new China label IMF product available to parents and their infants and young children in China, building on the strong brand loyalty we have developed with Chinese families over the past decade as the pioneer and leader of the A2 protein category,” Bortolussi said.

Chinese parents represent a lucrative key market for the dual-listed company, with revenue from its Asia market increasing 24.5 per cent in the 2022 financial year.

Bortolussi previously told this masthead the company was also seeking to build back its Chinese daigou community after the pandemic’s closed borders inflicted damage on the reseller channel into its key Asian market.

Synlait chief executive Grant Watson said the registration in China was a significant milestone and the company would benefit from the certainty received through the renewed approval.

“The re-registration is a very important milestone, and we have worked hard together to ensure its success,” Watson said.

Following the announcement, shares in A2 Milk traded 4.1 per cent higher at $5.56 shortly after 1pm AEST, ending the day 1.9 per cent higher at $5.44.

Tribeca Investment Partners portfolio manager Jun Bei Liu said the approval extended for a longer timeframe than most investors were expecting.

“The market was getting quite worried about what was happening with A2’s licence and was only expecting a short renewal or one or two years,” Liu said. “The approval removes an overhang for the company and is quite meaningful.”

Liu said China was a core growth market for A2 and that the company’s outlook was positive.

“A2 is one of the few companies that have managed to capture the imagination of Chinese consumers and the outlook now looks great.“

Sigma Pharmaceuticals has won over the Chemist Warehouse wholesale pharmaceuticals contract held by its much-bigger rival EBOS, in a major win for the business.

It has signed a binding term sheet with the pharmacy giant for supply of Pharmaceuticals Benefits Scheme (PBS) medicines and fast moving consumer goods (FMCG) items for five years starting in July 2024.

The contract is worth $2 billion annually and would triple Sigma’s existing Chemist Warehouse contract from $1 billion.

Sigma would pay Chemist Warehouse across new shares and a right to acquire some non-core assets. It would issue about 10.7 per cent of its share base at 64.2¢ a pop to the pharmacy owner at the start of the supply contract. (Sigma shares closed at 63.5¢ on Monday).

In addition to it, Chemist Warehouse would have the right to acquire certain non-core assets from Sigma that have a $24.5 million value. Should Chemist Warehouse decide not to buy the assets, Sigma would have to pay it $24.5 million net cash.

Sigma’s largest shareholder is David Di Pilla’s HMC Capital, which owns 19.07 per cent. HMC Capital, in turn, is backed by Chemist Warehouse’s owners and has been on fundies’ M&A radars for a while.

It is a major blow for the New Zealand and ASX listed EBOS, which has a $7.25 billion market capitalisation and was halted from trading on both exchanges on Tuesday morning.

Eric Morris will step down as chief executive of Larry Kestelman’s Brand Collective – the name behind Superdry, Clarks and Volley – after 18 years in the top job, with former David Jones boss David Thomas taking the helm.

Mr Morris was appointed to lead the Brand Collective business when womenswear retailer The PAS Group merged with Brand Collective in March 2022. Rich List property developer Mr Kestelman snapped up Brand Collective from Anchorage Capital Partners, which owns Shoes & Sox, Shoe Warehouse and Volleys, in 2021. He bought PAS Group after it fell into administration the year prior.

“It has truly been an amazing journey, from the formation of The PAS Group in 2005 following the acquisition of the Yarra Trail business by private equity, to my involvement in each subsequent acquisition of the PAS brands and to the delivery of the business as it stands today,” said Mr Morris, who will take a non-executive director seat and advisory role within the Brand Collective business.

Under his management, the enlarged Brand Collective business expanded its portfolio, adding Reebok, Replay and Canada Goose.

Mr Thomas headed up Country Road Group, as well as a short stint as CEO of David Jones, and stepped down from running Peter Lew’s Brandbank Group, which owns Seed Heritage and All Kinds, after four years.

“I am delighted to join Brand Collective and to work with the team to enhance business performance and deliver on future growth opportunities. The team have created a strong framework for future growth, and I look forward to this new challenge,” said Mr Thomas.

Executive chairman Mr Kestelman said the company is positioned for a prosperous future as the business evaluates growth opportunities.

“I would like to thank Eric for what he has done in building the business as well as his dedication and tenure, and I look forward to David’s future leadership and contribution,” he said.

Brand Collective’s parent company, Queens Lane Capital, was founded and is controlled by internet entrepreneur-turned-property investor Mr Kestelman, Boris Rozenvasser and Nick Tsoumanis.

Brand Collective is one of Australia’s biggest multi-brand apparel, footwear, and sports businesses, with a stable of 24 brands, over 300 retail stores and 14 e-commerce sites.

It also operates Designworks, the wholesale arm responsible for the development and distribution of private label and licensed sports and character brands such as Bluey.

Online liquor retailer Hairydog Group has acquired Boozebud and is set to optimise its combined potential to “transform the online liquor retail domain”.

Boozebud – which sold a range of beer, wine and spirits products online – collapsed earlier this month with administrators arranging to sell the business’ assets.

Ryan Agar, head of e-commerce at the Hairydog Group, said the acquisition strategically aligns the “strengths” of both businesses.

“This merger of two brands creates a powerhouse that is set to transform the online liquor retail space to provide better drinks and experiences to our customers.”

The acquisition will boost Hairydog Group’s annual revenue beyond $75 million, driving its profitability and strengthening its position in the online liquor retail industry.

Meanwhile, a redesigned Boozebud website relaunch is underway with the former chief technology officer of the brand, Damien Smith, joining the Hairydog team.

“To celebrate the return of BoozeBud and its new beginning, we have lined up a series of compelling promotions that we believe will thrill our customers and provide them with an unmatched shopping experience,” Agar said.

Food and restaurant technology start-ups Mr Yum and me&u have appointed investment banks to advise them on a potential merger.

The food and beverage digital payments companies are weighing up a combination as traditional funding sources like venture capital dry up for start-ups.

MA Financial is advising Mr Yum and boutique investment bank Record Point is working with me&u, people familiar with the discussions said. Earlier this month, The Australian Financial Review first reported the pair were in talks.

A potential transaction would likely be structured as a scrip-for-scrip merger. A combination is expected to bolster cash flow, while international aspirations could scale back as they consolidate their positions in Australia’s hospitality market.

The companies are still determining what a board structure would look like, and there is no guarantee a deal will materialise.

Hungry for capital

Led by chief executive Kim Teo, Mr Yum cut 17 per cent of its workers last year. The company scored $92 million in a Series A funding round in 2021. That investment was led by Tiger Global Management.

With similar technology, me&u was propelled by the same forces as Mr Yum, helping restaurants automate ordering during the pandemic. The start-up was founded by Stevan Premutico in 2018.

Mr Premutico nabbed early backing for me&u from restaurateur Justin Hemmes, who owns Merivale establishments like The Ivy complex, and chef Neil Perry, behind two-hatted restaurant Margaret in Double Bay.

In May last year, me&u mandated Record Point to gauge investor interest for a roughly $50 million capital raise.

Despite the early tailwinds of contactless ordering during the pandemic, both Mr Yum and me&u are evaluating joining forces as inflation bites and consumers dine out in greater numbers, a factor that may mitigate demand for QR code ordering systems.

Pullback from start-ups

Moreover, international growth VCs are stepping back from Australia’s start-up scene, Jason Georgatos, president of Partners for Growth, told the Financial Review this week.

The likes of Tiger Global and Japan’s SoftBank have retreated from innovative companies that fed off low-cost capital when interest rates were near zero.

Another challenge for early-stage investors is meeting the lofty returns their funds expected from investments originating in the earliest stages of the pandemic. Start-ups in particular have seen their valuations slashed, making it difficult to stomach a potential sale at a value well below what they would have garnered a couple of years ago.

Data from Cut Through Ventures underlines how much funding has slowed for start-ups. Deals of between $20 million to $49.5 million are down more than 50 per cent compared to the quarterly average from 2020 to 2021.

In the first quarter of this year, there were only two funding rounds exceeding $50 million: agritech firm Loam Bio raised a $105 million Series B and fintech Till Payments collected $70 million in a Series D fundraising.

A merger would stave off any need for Mr Yum or me&u to turn to costlier debt markets.