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Seeking to satisfy the growing demand for alternative milk, New Zealand beverage manufacturer Free Flow is to open the country’s first dedicated oat milk production facility this year.

The plant will expand the company’s existing manufacturing footprint with an additional 2500sqm of production, and 4000sqm of warehousing, with the capacity to produce 50 million litres of oat milk each year.

And in a world-first – developed with German machine manufacturer Krones and brewing technology expert Keones – the same machinery used to produce plant-based milk can also be used to process beer.

Scott Day, co-founder of Free Flow Manufacturing, shared that the demand for alt-milk has “skyrocketed” in recent years, outpacing traditional dairy, with no signs of slowing down.

“Grocery spending on plant-based milk in New Zealand increased by 44 per cent from 2019 to the end of 2022, with sales jumping from $61 million to $88 million,” explained Day.

Despite this, he explains, New Zealand has had to rely on imported products to meet demand.

“The launch of our new plant-based milk facility in East Auckland is an important milestone for the sector, enabling it to reduce its carbon footprint, improve innovation and produce premium products locally for health-conscious consumers worldwide,” he added.

Free Flow also partnered with plant-based milk brand Otis, allowing the South Island company to relocate the manufacturing of its oat milk from Sweden to New Zealand.

Otis co-founders Tim Ryan and Chris Wilkie launched their first oat milk product in 2018.

“As we scaled up our production, we weren’t prepared to compromise on quality, and because of this, we had to ship our New Zealand oats to Sweden for manufacture due to the lack of a local partner that has the technology required to produce premium oat milk to the gold-standard we demand,” they said.

“We’re thrilled to have finally cracked this with Free Flow and truly believe that New Zealand will be a force to be reckoned with when it comes to producing dairy and non-dairy milk.”

The days of lockdown-induced drinking at home are firmly in the rearview mirror, and Dan Murphy’s is back in the events game.

From champagne and rosé tastings to extravagant celebrations for Lunar New Year, the drinks giant is mingling with its consumers again. Over the past six months, the business has been involved with about 500 interactive experiences across the country.

“I’ve come to realise more and more that drinks is not just a product for a lot of people, it’s actually a hobby. It’s this element of really wanting to engage, wanting to learn and find out more,” Dan Murphy’s managing director Agi Pfeiffer-Smith said.

Pfeiffer-Smith had a bird’s-eye view of Australians’ relationship with alcohol during the pandemic. Having previously held senior roles at retail giants, including Wesfarmers and David Jones, she joined Dan Murphy’s parent company, the ASX-list Endeavour Group in May 2020, just as the country was coming to terms with COVID-19. She was promoted to managing director last July, giving her oversight of the more than 260 stores and the group’s growing e-commerce business, right at the time of an anticipated consumer slowdown.

The country is now facing a cost of living crunch brought on by inflationary pressures and rate rises, but Pfeiffer-Smith is unfazed by the tough economic climate and continued slowdown in discretionary spending.

When asked how shoppers are changing their buying habits in response to ten consecutive interest rate rises and soaring inflation, she says the only really noticeable trend is that people are taking fewer risks with their drinks purchases, and instead sticking to tipples they already know and like.

“This is one of life’s small luxuries still, and I think the business continues to benefit from that,” she said.

Founded in 1952 by winemaker (and former Age columnist) Daniel Francis Murphy, Dan Murphy’s has seen more than a few changes since its first store opened on Prahran’s Chapel Street.

This year marks two decades since the company opened stores outside Victoria, starting with Strathfield and Hurstville in New South Wales. Over the past 20 years the business has grown from a network of 15 stores to more than 260, plus a pumping online business and 5 million active members in its membership program.

After a $12 billion spin-out from Woolworths in 2021, Dan Murphy’s and its sibling brand BWS form the retail arm of Endeavour Group, which also owns the ALH pubs business. In the first half of 2023, Endeavour’s drinks retail sales hit $5.4 billion - a slight decline on the previous year when COVID restrictions drove demand. Still, it remains 14 per cent higher than three years ago.

The scale and ownership of Dan’s may have changed over the decades, but Pfeiffer-Smith remains focused on building the basic pillars of the stores: price, service, and a wide range of products.

“It’s that breadth of range, the breadth of discovery of something new, something exciting. It’s been compared to like, either a library you wander through, or like a lolly shop for adults,” she said.

As she discusses the brand’s future, it’s clear she sees the company as more than just a drinks operator. It’s a data cruncher, an events operator and a content maker that wants insights and conversations with its customers.

Many of those consumer insights are garnered from the company’s loyalty program, My Dan’s, which has notched up 5 million members over the past few years. The draw card for these members is price.

Each day, a group of staff log on to track the cost of hundreds of popular beverages and beat the market.

As its millions of consumers interact with the business, Dan Murphy’s learns more and more about what they like. The anonymised pool of data helps the business see the interests and shopping behaviours across a range of demographics. “We can see what premium customers are doing, and younger versus older, and how that plays out across different customers,” Pfeiffer-Smith said.

It helps shape the group’s content business, including its digital platform Dan’s Daily, where lists of the top Margaret River cellar doors sit alongside tutorials on how to start drinking mezcal.

Dairy company Fonterra has reported a 50 per cent lift in tax-paid profit to NZ$546 million in its half-year results.

For the six months to January 31, revenue increased 23 per cent to $13.2 billion while normalised EBIT reached $940 million, up 55 per cent.

Operating expenditure was up by $1.4 billion due to inflationary pressures, unfavourable foreign exchange translations and impairments in the New Zealand consumer business and Asia brands respectively.

Milk supply from key exporting regions – Europe, Australia, New Zealand and the US – was down 0.4 per cent while imports were down 1 per cent.

The business says challenging wet weather conditions in North Island coupled with a reduction in the number of cows has affected peak production. 

Despite ongoing market volatility, Fonterra CEO, Miles Hurrell, says the co-op is “performing well”.

“Our scale and diversification across channels and markets have enabled us to navigate through disruption and make the most of favourable market conditions in a number of areas,” he said.  

The company has made favourable margins in its cheese and protein portfolios and has moved more into skim milk powders and cream products to optimise its Farmgate Milk price.

“While milk powder prices have softened recently, impacting our forecast Farmgate Milk Price range, protein prices have been high, which is reflected in the lift in earnings,” he said.

“The outlook for dairy remains positive with high demand for New Zealand’s quality, sustainable dairy nutrition, and global milk supply likely to continue to be constrained.”

Hotel and liquor retailer Endeavour Group has delivered strong first-half sales of $6.5 billion, 2.5 per cent higher than last year.

EBIT increased by 15.8 per cent to $461 million, which the company attributes to the hotel operations’ return to full swing after the pandemic. On a three-year comparative basis, hotel and retail sales are trading at 4.7 per cent and 4.5 per cent cumulative annual growth rates, respectively.

Steve Donohue, CEO and MD of Endeavour Group, said that with domestic travel returning, December saw customers return to more normal holiday activities and a full social calendar. Stores and hotels in regional and coastal towns also performed strongly.

He also acknowledged the company’s physical and online network and digital capabilities, allowing it to deliver “true omnichannel experiences”.

New services include gifting, click and collect, electronic shelf labels, and image-search functionality in apps.

“We continue to focus on meeting customer demand for drinks discovery: a strong new product pipeline and our extensive selection of premium and craft options have contributed to our overall earnings,” Donohue added.

“Our results this half are a credit to the hardworking and passionate team members right across our operations.”

Meanwhile, the company also named its new CFO Kate Beattie as current CFO Shane Gannon steps back from executive roles.

Beattie has held finance leadership roles within Woolworths and Endeavour Group for the past five years – from working as finance director for the retail drinks division of Woolworths to becoming interim CFO of Endeavour, leading preparations for the demerger and deputy CFO after the demerger.

She has also led the BWS retail business as interim MD.

Before joining Endeavour, Beatty spent 20 years in roles across retail, technology, banking, and professional services in international companies such as Commonwealth Bank, Macquarie, and Oracle.

“Today’s announcement is a testament to both Kate and Shane and their executive leadership in establishing Endeavour Group as a standalone company,” said Donohue.

“I would like to pay special tribute to Shane for his enormous contribution to the company, bringing his wealth of experience during such a formative period, embedding best-in-class strategy and governance and fostering an exceptional culture.”

Incoming Coles chief executive Leah Weckert says fresh food price rises will begin to moderate this year, but the cost of other products will continue to increase, with shoppers already switching to its cheaper home brand for staple goods.

Ms Weckert, an Adelaide native who has worked at the company since 2011, will become the first woman to run a major supermarket chain in the country after Coles announced she would succeed Steven Cain on May 1.

Her appointment came as Coles’ net profit from continuing operations rose 11.4 per cent to $616 million for the six months to December 31, while revenues gained 4 per cent to $20.59 billion. Sales rose to $20.02 billion, up 3.9 per cent, once its Express store business, divested last year, was removed.

The company said inflation had hit 7.7 per cent for its products in the three months to December 31 – compared with 7.1 per cent one quarter earlier – and 8.4 per cent excluding tobacco and fresh foods.

Ms Weckert said Coles had seen strong growth “in areas like pasta and rice and oil where we have seen home-brand trade particularly strongly and shoppers trade out of proprietary (brands). That’s probably the key ones that we’re seeing that are indicating that some customers are definitely moving (down),” she said.

Some shoppers are also trading to cheaper cuts of meat from more expensive cuts like steak, she added.

The number of price-rise requests from suppliers appeared to have peaked in the second quarter, Ms Weckert said, warning pressure remained in some categories like dairy, given higher farmgate prices for milk. Others, like tomatoes and broccoli, had seen prices decline.

“We are expecting pressures to remain, but we are expecting them to start to moderate. The pressures we think will continue to stay are in areas like dairy, energy and wages, but we would expect some moderation starting to come through in areas like freight, wheat and packaging,” she said.

Suppliers such as fresh fruit grower Costa Group confirmed on Tuesday input cost inflation pressures were expected to moderate this calendar year, as normal growing conditions returned.

Mr Cain said he expected inflation to moderate, however, in the six months to June 30. Volume growth returned to modestly positive from mid-January, he said, and customers would increasingly rein in spending at cafes and restaurants to the benefit of the supermarket business.

Over the past five years Mr Cain has steered the nation’s second-largest supermarket chain through its demerger and the COVID-19 pandemic.

Mr Cain, who turns 60 next year, told The Australian Financial Review he promised himself he would be gone by this milestone.

“It’s been 35 years in the making, and even five years as it was – was no ordinary five years either,” he said, noting bushfires, extreme flooding disrupting supply chains and the global impacts of the pandemic.

Eventually, Mr Cain looks forward to taking on some non-executive roles and spending time with family. He will stay on board for a handover period.

Ms Weckert has a background in engineering, science and business, having spent her early career at consulting firm McKinsey & Co, and earned an MBA from Harvard as part of a McKinsey fellowship program.

The 43-year-old mother of two grew up in retail: her father owned a grain and fodder store where she would help out mixing up the bird seed and doing chores. She later worked as a pharmacy assistant, but always harboured dreams of being a CEO. Coles chairman James Graham said her appointment was an important moment in the company’s 100-plus-year history, describing Ms Weckert as a “standout in a very busy business”.

Supermarket gross margins rose 0.43 percentage points largely as a result of reduced COVID-19 costs in the first half, but the cost of doing business also climbed 0.15 percentage points. Coles, like all retailers, faced higher wages bills and supply chain costs over the December half as well as investment in e-commerce. Earnings before interest and tax rose 10.6 per cent to $991 million. Coles’ capital expenditure program over the next two years is forecast to be more than $2.7 billion, with the biggest projects being distribution centres and Ocado customer fulfilment centres.

As it expands Ocado, Coles is hoping to increase the average basket size of shoppers, create higher supplier returns, and improve online profit margins. Coles expects the project to cost about $330 million.

In January, the first Witron automated distribution centre – the largest in the southern hemisphere – in Redbank, Queensland, began receiving inbound deliveries. Store deliveries are expected to start in the fourth quarter.

Mr Cain said he was “highly confident” in handing over these major projects to Ms Weckert who has been at his side in the rollout and “knows just as much as I do”.

Barrenjoey Capital analyst Tom Kierath said Ms Weckert was a natural successor to Mr Cain, adding that Coles’ leadership planning was clearer than its larger rival, Woolworths.

“When she was CFO she was all over the numbers and could articulate the strategy. She has a financial background and has done the operating thing as well, so it’s a good combination,” he said. “For investors, Coles is making this huge investment program, they are worried about returns on that investment. Leah has been in there so the fact that she will be CEO to deliver on this over the next few years is a good outcome.”

Mr Kierath added that the half-year sales growth was intact, the cost base was being well managed, and it was apparent that Coles was not suffering against the backdrop of the weaker macro environment.

The Coles board declared a 36¢ dividend, from 33¢ a share a year ago and payable on March 30. Coles shares fell 0.9 per cent to $18.13.

Vitamin supplements prices are rising and could spike further due to inflation and higher costs for key ingredients such as fish oil.

Production costs increased in the sector over the past year, and raw ingredient prices have also jumped, including almost a two-fold rise in the price of fish oil exported from South America since 2020.

Alastair Symington, chief executive of major vitamin supplements maker Blackmores, said the price of raw materials for its products had risen between 15 and 20 per cent over the past six months.

A spike in costs prompted the ASX-listed company to increase prices across some of its products over the past six months, particularly products that relate to eye care, immunity and energy.

Prices increased between 5 per cent and 6 per cent in Australia and New Zealand, and between 7 per cent and 8 per cent in international markets.

Symington said the company would consider further increases in coming months because of continued inflationary pressures.

“It’s something that we’re looking at ... but it is not something that we would take unilaterally across our range, it would be selective,” he said.

He said some products could see additional price increases of more than 5 per cent if materials prices remained elevated. While global supply chains were stabilising, commonly used ingredients like fish oil have spiked in price over the past year, putting pressure on supplement makers.

“In the last six months, raw material commodity prices [have seen a] 15-20 per cent increase,” Symington said.

“We haven’t put through price rises that 100 per cent cover all of that.”

Blackmores is not alone in warning on increased costs for the consumer. Several other ASX-listed companies told investors this month that prices on a wide range of products, from dairy goods to kitchen appliances, had gone up to offset inflation.

Cheesemaker Bega said last week that it was confident the days of steep dairy price increases had come to an end – but flagged that more price increases in line with “normal inflationary pressures” would be seen this year.

Major supermarkets Coles and Woolworths were also optimistic that overall grocery price inflation would moderate this year, but both confirmed price growth had accelerated faster in the December quarter than in the three months to September last year.

Other consumer goods brands also flagged price increases in the six months to December: coffee machine maker Breville reported that it pushed through “specific price increases” on certain products, while discount retailer The Reject Shop said it was left with no choice but to raise selling prices in a “targeted way”.

Analysts expect inflationary pressures to moderate later this year, but some predict further price jumps, particularly in food.

“Channel checks with suppliers, assessment of global fast-moving consumer goods (FMCG) outlook statements and analysis of soft commodity prices point to significant food inflation over the coming two to three years,” Barrenjoey consumer analyst Tom Kierath said in a note to clients last week.

American fast food chain Wendy’s plans to roll out “hundreds” of restaurants in Australia and will consider offering franchisees incentives such as royalty abatement and co-investment to help speed up its quest for a lucrative share in the market.

Wendy’s president, international and chief development officer Abigail Pringle will this week host virtual talks with prospective master franchisee holders in Australia about different models that could be used, including the purchase of land for new restaurants.

“We believe Australia is a lucrative market for long-term growth. We think that the Australian market could be hundreds of restaurants,” Ms Pringle told The Australian Financial Review from Wendy’s headquarters in Columbus, Ohio.

“We have to be careful with what that timeline is exactly because we want to pick the right partner. And that takes a little bit of time. But we think that we can have hundreds of restaurants in the market over time.”

The Australian quick service market is expected to grow 32 per cent over the next five years to $8.7 billion, according to Euromonitor data, and Wendy’s wants a bite of that after having success in the UK market.

The $US4.8 billion ($7 billion) franchise chain, which differentiates itself from the likes of McDonald’s and Hungry Jack’s with a “made-to-order only” policy and “no heating lamps”, says it wants to increase its global restaurant numbers to 8500 by 2025 from 7000 now.

‘Built to suit’

It is a big ask, but Ms Pringle, who has been with Wendy’s for 21 years and started eating the burgers when she was a girl growing up on a beef farm in Maine, says it is achievable, especially if the company uses its own balance sheet to buy land and build restaurants to speed up new franchise roll-out.

“We have a very active new program that we launched last February, called ‘Own Your Opportunity’, where we are doing ‘built to suit’ to help us build out the US market.

“We are putting money on our balance sheet, we are finding the land, we are designing the building, building the building and handing you the keys.

“We haven’t yet said that we’re going to do that in Australia, but all I would share with you is we are actively doing that in the US and in Canada. And we may expand that. We are always open to looking at how a strategy that works in one market might work in another.”

So far, Ms Pringle is focused on getting the right partner in Australia. That could mean a listed group such as a Collins Foods, which operates KFC and Taco Bell, the Retail Food Group, which operates Donut King. It could also mean a family office getting involved.

“When we look at Australia, we look at what kind of franchise model do we want to use. And right now, our plan is to have a master franchise model in Australia,” Ms Pringle said.

“We’re looking for very specific candidates that are well capitalised, that are focusing on creating great teams and culture that might also have some infrastructure for other businesses that they may own.

“Private equity that wants to come in for five years, and then turn it – that we’re not interested in. But we are interested in folks that have patient capital that want to build a business over the long term and work with us together to grow the brand.

“We are absolutely open to private investors; there may be family offices that are interested – that’s something that is becoming more and more prominent,” she said.

Determining the master franchise partner would come hand in hand with the type of model used.

“We work with candidates to understand what they’re bringing to the table around their business and their know-how and their financial wherewithal, and then we work with them to understand what we think about things like incentives. For example, we often invest in new franchisees, perhaps with royalty abatement, or perhaps marketing investment.”

The average gross annual sales for a franchised Wendy’s restaurant in the US was $US1.75 million in 2020, with 4 per cent revenue royalty fees.

Getting the franchisee right will be one thing, but judging the customer appeal and loyalty is another.

Australians arguably have fresher fast food than Americans, and living up to standards could be tough.

In 2021, Wendy’s built a pop-up restaurant in Sydney to see what Australian consumers thought of the brand.

“That was a very big success. We had great fans, people loved our signature items. We sold our Dave’s Single [burger] and our signature frosty dessert,” Ms Pringle said.

“That really just gave us more encouragement that Australia was a market where customers want us to come that we’d have brand fans.”

Wendy’s also does fresh salads and there is a promise to use only local ingredients.

“We will have Australian ingredients. That’s an important thing – to really work within the market. And that’s what we believe can be done in Australia.”

Ms Pringle, who grew up on a beef cattle farm in the north-eastern state of Maine, has been eating Wendy’s all her life and says the quality of beef is crucial to a good burger.

“My parents were physicians and working farmers and my dad would bring me to the Wendy’s in Portland, Maine, because he said it always had the freshest, highest-quality beef and that’s where you get a great hamburger.

“That’s a true story. That’s how I grew up and I’ve been at Wendy’s now 21 years now.” She admits her favourite meal now is the spicy chicken sandwich followed by Dave’s Double.

While Ms Pringle might be biased, one of the world’s richest people and a fast food aficionado, Warren Buffett, has also given Wendy’s a tick.

“I go to Kentucky Fried. I go to McDonald’s. I go the Burger King. I occasionally go to Wendy’s,” Buffett famously told CNBC’s Squawk Box.

Within a few years Australians will be able to decide for themselves.

It is hard to imagine a chief executive closer to the front line of the rising prices of energy, petrol, wages, raw materials and basic household goods than SPC’s Robert Giles.

The 100-plus-year-old Shepparton-based food processor – sold by Coca-Cola Amatil for $40 million in 2018 after a $22 million state government bailout in 2014 – pumps out more than 100 million cans of food each year, processing apples, apricots, peaches, pears, plums and tomatoes.

Giles’ supply chain – largely drawn from the Goulburn-Murray food bowl region on the Victorian border with New South Wales – is vulnerable to everything from floods to energy prices, wage claims, and steel and petrol prices.

Giles says the 10 to 20 per cent rise in household staples, such as SPC baked beans and spaghetti, Ardmona canned tomatoes and Goulburn Valley fruits, that SPC pushed through last year has stabilised, but warns input prices are yet to drop.

“We are seeing the heat of the increases dissipate. They are not coming back down, so it’s like it has normalised at a new high,” Giles tells BOSS from the group’s headquarters in Melbourne.

The SPC CEO is articulating the very concern which has Reserve Bank of Australia governor Dr Philip Lowe sweating.

“If inflation does become ingrained in people’s expectations, bringing it back down again is very costly,” Lowe told a parliamentary hearing last week.

It is not surprising that Giles, a 55-year-old father of four, is close to the ground in terms of what is going on. The CEO dropped out of high school after year 11 and started working the floors at Coles in Hobart, Tasmania.

“I went straight out of high school, year 11,” he says. “I’m a big advocate that your year 12 ATAR score doesn’t define you,” he says.

“I later on went and did my bachelor of business and accounting, and masters of marketing.

“I still look back and think [working at Coles] gave me a really strong work ethic [and] a consumer focus, but also [an] understanding [of] the process. Even though I was young, I learnt a lot of lessons about managing teams and labour utilisation. It gave me a real-life university of sorts.”

Giles moved from Coles to Nestle as a sales representative, before switching to Simplot, the company behind food brands Birds Eye, Edgell and John West, for 22 years, where he worked with customers such as McDonald’s, KFC and Woolworths.

Given his hands-on experience, it is hardly surprising Giles can reel off the rise in his input costs with more precision than most bean counters.

“Tomatoes have increased dramatically, over 30 per cent in a year, mainly due to fertiliser input costs. Peaches have had a 13 per cent price increase. The rest [have experienced] more around CPI increases,” Giles says in his strikingly open and unguarded style.

“Pasta for our spaghetti, which is locally sourced, has been affected by inflation. We just signed off new sugar contracts which are on the rise because of [last year’s] floods.”

Giles says the SPC factory in Emu Plains, NSW, which processes frozen meals, has been hit by high energy prices, as well as higher prices for chicken, which the country’s largest chicken producer, Inghams Group, blames on the need to recover the rising cost of feed, packaging and freight.

The high prices of petrol and steel are other big input costs for SPC.

“Diesel [petrol] remains stubbornly high. The steel can our product goes into remains high.”

Another major input is human capital. SPC employs about 500 workers, a figure boosted by about 400 during the picking season. Giles has just had their enterprise bargaining agreement approved by Fair Work after many months of negotiation.

“We have agreed on an average 3.5 [per cent increase] over the next three years,” Giles says.

The rise is slightly higher than the 3.3 per cent increase in wages across the economy last year – which was the fastest increase in a decade.

Giles also faces the challenge of an ageing workforce. The average age is in the early 50s.

SPC’s three factories, including one in Thailand, are also big consumers of energy and face a large rise in costs once they come off their fixed price contracts at the end of the year.

”We are working on projects to put solar on our roofs, but that will only give us about 25 per cent of our energy requirements,” he says. “We’re also looking at hydrogen. There’s a study being done by Goulburn Valley Water, but that is some years off.”

As part of SPC’s efforts to become more environmentally responsible, Giles is also attending a Climate Leadership and Jobs Summit in Shepparton this week, convened by the local Nationals MP Sam Birrell, which aims to help drive the Goulburn-Murray region to its net-zero emissions target by 2050.

But Giles concedes that despite the goodwill, the major manufacturing hub – which includes players such as SPC, Unilever, Bega Cheese, Tatura Milk, Campbells Soups, Freedom Foods and Visy – faces a real challenge to ween itself off the reliable coal and gas plants that support such energy-intensive manufacturing.

Despite the energy and inflation challenges, Giles says SPC’s turnaround mission is largely complete.

“We were unprofitable under Coke, but have been profitable every year since,” he says.

“We had a real focus on keeping our cost inputs down, getting our labour and wages under control, some restructures to take labour costs out of the business and then getting the right contracts for volume.”

The company is now embarking on an ambitious growth strategy to increase annual revenue from $300 million to more than $1 billion within three years.

The new names on SPC’s share registry, including The Australian Meat Industry Superannuation Trust and the family office of Peregrine Corporation managing director Khalil (Charlie) Shahin, who joined as part of last year’s $45 million capital raising, are backing the growth plans for the business which started more than 100 years ago as a co-op owned by farmers.

After SPC and Ardmona merged during the ’90s, the enlarged group was bought by Coca-Cola Amatil in 2005, but was largely neglected and sold to the Sydney-based private equity firms Perma Funds Management and The Eights in 2019, which remain the majority owners.

“It’s a multi-focused approach,” Giles says of the expansion plans.

The strategy is to build SPC as a global food company based in Australia, with a focus on driving into new markets. The company entered the New Zealand market last year, has moved into Canada and South Korea, and will launch in Singapore, where it has built an international office, in April.

The plan also includes diving into the beverages category, which was restricted under Coca-Cola ownership.

“Under our new ownership, beverages is absolutely a category we want as part of our strategy,” he says.

“We have always produced beverages. We are one of the major juice manufacturers in the country.”

Giles also has the investors’ purse out to aggressively make acquisitions of companies that fit the business model and help the group expand into Europe.

“That will help us get to the billion [dollars revenue growth]. It’s organic – it’s new markets and it’s acquisitions, all at once, that will get us from $300 million to north of a billion.”

Health supplements company Blackmores has reported a marginal slump in sales after demand softened overseas.

For the six months to December 31, group sales fell 1.6 per cent to $338 million offset by a decline in international sales. Statutory tax-paid profit grew 19.6 per cent to $24.3 million.

In Australia and New Zealand, revenue rose 3.9 per cent to $150.8 million with the Blackmores brand maintaining its top spot in the markets.

To offset inflationary pressures, the company implemented supply chain cost-saving measures and average price increases of 5 per cent to 6 per cent.

Sales in China rose 6.1 per cent to $93.7 million while cross-border e-commerce channel sales stabilised. The company credits the Double 11 e-commerce festival as a “key contributor” to sales in this segment.

Blackmores’ international business was “lapped” by significant Covid-related surges in the prior corresponding period and revenue declines in Indonesia. Overseas sales fell 15.1 per cent to $93.5 million however market share and brand strength continued to increase.

Group CEO Alistair Symington said the company’s teams continued to focus on improved customer service levels and new product and brand innovation which drove market share and distribution gains across Blackmores’ core geographies.

The company says it is on track to deliver $55 million of gross annualised savings by the end of this financial year.

“Productivity isn’t everything, but in the long run, it’s almost everything” – Paul Krugman, American economist. 

This quote sums it up well, if you want to be successful in the long run, you must be productive to be competitive. To be productive you must be focused and have a culture of continuous improvement.

This year presents us with some interesting challenges. In the face of a tight labour market, inflationary cost pressures, the desire for digital transformation and the importance of tangible ESG commitments many organisations are grappling with how to drive sustainable productivity in their operations. 

The last few years have proven that businesses that have focused on their people, strategically invested in technology advancements, and targeted sustainable operations have been more competitive and won market share.

There are some common themes or strategies that are being deployed by these successful organisations. Let’s explore the Top three we are seeing drive sustainable productivity in FMCG operations.

Operational excellence

As mentioned above, to be productive you must be focused and have a culture of continuous improvement. This culture is all about your people and your leadership. Driving sustainable operational productivity requires an understanding of the support and training your leaders and your team need to get to best practice levels of performance. You then need to take them with you, coach, train and develop the required standards to remove waste and embed sustained practices that consistently deliver performance efficiencies. Top performing organisations use lean methodologies to unlock and sustain operational excellence.

Automation of tasks

Technology is both a disruptor and an enabler. Digital transformation done well creates significant advantages, done poorly and you can go backwards.  It is important to recognise that it is not easy to understand and identify what technologies to invest in and when to do so – spending time upfront on a digital roadmap for operations is critical to ensure alignment and engagement for the journey ahead. Again, taking your people with you is fundamental, adoption of new ways of working is the foundation to sustained change. Automation of tasks – process, data, systems, or robotics will boost your productivity, build resilience, and focus your people on more value-add customer facing activity.  

The pursuit of sustainable success 

Operations is where the rubber hits the road for an organisation’s sustainability agenda. Being more productive means more efficient use of resources and results in less waste – this is a positive impact on sustainability that must be managed, measured, celebrated and continuously improved. But it is more than this: operations is where goods and services are transformed and moved through physical networks and infrastructure from suppliers to customers. To make real change, you need to ‘operationalise’ sustainability. Deciding where to start requires deep operational expertise to identify how to make effective interventions, measure performance, set targets and deliver improvements through your supply chain from supplier to customer. To truly drive sustainable success, you need to measure the whole picture and prioritise levers and recognise that reducing impact is all about operations.

The best time to start the journey is now, the gains can be significant and in the face of sustained challenges, driving sustainable productivity is fundamental to remaining competitive.