News

Anna Croft has been appointed as Coles’ new chief commercial officer, effective January next year.

Croft is the current COO of Mecca Brands where she helped transform the retailers’ business operations for health and beauty.

She comes with 20 years of industry experience and has worked with leading retailers such as Tesco, Coles, Mecca Brands and WHSmith in the UK and Australia.

Coles CEO Leah Weckert said she is delighted that Croft is returning to Coles with significant leadership experience in both local and international retail.

“Anna will play an essential role with our team and suppliers to deliver exceptional quality products, innovative exclusive brands and convenient meal solutions for our customers at a great value.”

Casual brand Crocs has reported record quarterly sales of more than US$1 billion, reflecting a 12 per cent increase in constant currency terms over the previous year.  

The company’s growth was driven by Asia, where sales increased by 33.2 per cent, or by 39 per cent on a constant currency basis, and North America where direct-to-consumer (DTC) comparable sales grew by 12.9 per cent year on year.

Revenue of $160.1 million from Europe, the Middle East, Africa, and Latin America decreased by 0.2 per cent or 1.4 per cent when measured in constant currency.

“We achieved record quarterly revenues of over $1 billion, representing growth of 12 per cent on a constant currency basis to prior year,” said Andrew Rees, CEO. 

“Both the Crocs and HeyDude brands continue to gain share and bring in new consumers with our comfortable offerings, as evidenced by DTC growth of 26 per cent in the second quarter. We continue to invest behind our strategic priorities that are driving profitable growth.”

The business anticipates a consolidated sales increase of 12.5 per cent to 14.5 per cent in the third quarter of this year compared to 2022, translating to revenues of roughly $4 billion to $4.065 billion at exchange rates as of the end of the most recent reported period.

Washington | American fast-food chain Wendy’s has inked a deal with the world’s largest food franchisee and the new owner of Pizza Hut in Australia, Flynn Restaurant Group, to build 200 local Wendy’s stores starting in two years’ time.

In a deal foreshadowed by The Australian Financial Review in February, the Nasdaq-listed burger giant – the world’s third-largest after McDonald’s and Burger King – will pose a fresh challenge to local operators such as Hungry Jack’s.

Hungry Jack’s’ founder, billionaire Jack Cowin, has questioned Wendy’s’ ambitions in Australia after its foray in the 1980s failed.

Abigail Pringle, president for Wendy’s international and chief development officer, said that following the positive reaction from Sydneysiders to a one-day Wendy’s pop-up event in 2021, and the overwhelming interest in its arrival, the burger company was ready to formalise a deal.

Ms Pringle said Australia is a “high priority, strategic growth market” and that she was ready to take on competitors such as Mr Cowin.

“We clearly have [Mr Cowin’s] attention. But he does not have mine,” Ms Pringle said.

“I’m focused on the customer. And we’re focused on delivering on a great brand experience. I’d love to invite Jack to Wendy’s when we launch and maybe he can really experience for the first time a fresh, never frozen Wendy’s hamburger.”

In 1982, Wendy’s arrived in Melbourne, an expansion set up by one of its then major US franchisors, the Tennessee-based Johnston Southern Corporation.

Ms Pringle said the operating environment had changed significantly in 40 years and the Flynn Restaurant Group had “incredible experience” in the restaurant space.

Ms Pringle said Wendy’s competitive edge would come through freshness of product, supply chain advantages (it already has existing supply chains in Australia for its Asian and New Zealand markets), new look stores designs and the strength of the world’s largest restaurant franchisee.

“Flynn has a strong leadership team, great culture, vast industry knowledge, success with our brand in the US, and we are confident that Flynn Restaurant Group is the right partner to unlock growth for Wendy’s in Australia.”

Flynn operates Taco Bell and Pizza Hut in the US, as well as 190 Wendy’s shopfronts in five states and Washington DC.

It owns and operates 2600 restaurants including Applebee’s, Panera and Arby’s and generated $US4.5 billion in sales last financial year with over 75,000 employees.

Wendy’s said the agreement with Flynn would drive growth in Australia “primarily after 2025, with the ambition to hit 200 restaurants across the country through 2034, through a combination of equity stores and sub-franchise partners”.

Wendy’s transaction with Flynn includes a master franchise fee and an additional income stream from each of the Wendy’s stores once in operation.

Flynn’s chief operating officer Ron Bellamy said he looked forward to expanding the brand and was in the process of redefining what Australians should expect from quick-service restaurants.

“It is a tremendous brand with significant untapped potential outside of the US and we think it is an especially great fit for Australia, given the savvy nature of the Australian consumer,” Mr Bellamy said.

Average gross annual sales for a franchised Wendy’s restaurant in the US was $US1.75 million ($2.7 million) in 2020, with a standard 4 per cent revenue royalty fee.

Wendy’s also has separate agreements for non-traditional locations, such as petrol stations, food courts, military bases and delivery kitchens.

Wendy’s has, in the past, used incentives to promote new restaurant development. This year, in the US and Canada, it offered royalty, national advertising and technical assistance fee waivers for up to three years for some operators.

Wendy’s also typically charges a standard technical assistance fee for newly executed franchisees of about $US50,000 for each new restaurant opened.

Ms Pringle said there had been “really great contenders” to take on the master franchise for Wendy in Australia and a long list of those who wanted to take on a smaller number of Wendy’s store franchises.

Subscription-based meal kit provider Marley Spoon plans to revise its full-year revenue guidance after sales plummeted on soft consumer demand.

For the quarter to June 30, net revenue fell 21 per cent to €86 million (A$141.31 million) while operating EBITDA slumped 161 per cent to A$3.94 million.

In Australia, net revenue grew marginally, up 1 per cent to $59.32 million while the US market reported a 9.1 per cent increase to $67.37 million.

In Europe, net revenue grew 16 per cent to $14.62 million however high inflation and interest rates have put pressure on the company’s conversion and early retention rates in the region.

During the quarter, the average order volume increased by 7 per cent benefiting from several revenue-enhancing activities along with price increases carried out last year.

Marley Spoon CEO, Fabian Siegel, said the results are “consistent” with the first quarter as consumer challenges coupled with price sensitivity and low consumer confidence impacted acquisition volumes and order frequency in the US and Europe.

Reflecting on the sentiments, CFO Jennifer Bernstein said persisting economic concerns have led to lower order frequency and a subsequent sales decline.

“We do see an improved trajectory throughout the second quarter and therefore anticipate more favourable spending patterns in the second half of the year.”

Aldi Australia has named Anna McGrath as its new CEO, succeeding former local chief Tom Daunt who became the business’ joint MD in May.

McGrath has been with the company for 17 years in various leadership roles and was the former group MD for both US and Australian businesses.

Of her appointment, McGrath said she is “honoured” to lead the business, adding that Aldi has always been focused on price leadership, but “it has never been more important than now”.

“We have a responsibility to maintain our price gap and show Australians, that are facing pressures within their family budgets, that they will achieve serious savings by changing their weekly shop to Aldi, without comprising on quality.”

According to third-party data, the company’s Price Promise helped contribute $3.1 billion in savings delivered directly to customers last year.

“We have a very strong strategy in place that is resonating with Australian customers, I’m looking forward to bringing Aldi savings to more and more households,” said McGrath.

The global boss of SodaStream says demand for at-home sparkling-water machines is still growing despite the recent failure of local competitor SodaKING and the broader slump in consumer spending.

Victoria-based SodaKING, founded in 2014 to sell the machines and gas cylinders, was placed into administration in early June, although it continues to trade.

SodaStream chief executive Eyal Shohat described SodaKING as a worthy competitor and said he was not happy to hear of its situation.

“I think what happened to them is quite unfortunate,” Shohat said during a visit to Australia last week. “It’s not a softening of the category. I know the numbers; the category’s not going down.”

SodaKING administrators are seeking a buyer for the business.

Shohat said being alone in the category would not be the best thing.

“The greatest form of flattery is competition ... We welcome competition. It also keeps us on our toes,” he said.

Data shows consumers are “trading down” branded items to home-brand and private-label goods given the rising cost of living and reducing spending on restaurant meals, takeaway food and coffees.

Shohat acknowledged the challenges to household budgets but indicated sales had increased since the start of the year.

“In the last year to date, so from January to today, we see growth,” he said. “We started to see a recovery in Australia; it’s actually quite an amazing recovery.”

SodaStream declined to provide sales or revenue figures.

It entered Australia in the late 1970s and has retained market dominance since. Local sales have also been supported by a global branding refresh the Israel-headquartered company launched late last year to reposition itself as a more upmarket product.

Its most recent financial report lodged with the Australian Securities and Investments Commission shows SodaStream’s profits after tax were $2.3 million in 2021, falling from $2.5 million the year prior.

As part of his visit to Australia, Shohat has been touring stores around the country selling SodaStream and said he was impressed by brand repositioning “coming to life” in retailers such as JB Hi-Fi, the Good Guys, Woolworths and Coles.

“I think Australia is the most advanced market in the SodaStream world to implement our new repositioning to elevate the brand to create this holistic ecosystem of beverage for consumers,” he said.

“This market here for SodaStream has been massively growing. We’re getting into more and more and more households all across Australia. Coming here and seeing this, it’s amazing.”

To capture consumer interest and spending dollars, SodaStream recently launched a global marketing campaign aimed at encouraging users to be more creative and experimental with their SodaStream flavours.

Australian infant formula Company, Bubs Australia, has reported a group gross revenue of $20 million for the fourth quarter, marking a 27 per cent increase compared to the previous quarter and continuing the sales growth momentum.

Gross revenue for branded products – excluding B2B and bulk powder sales – amounted to $19.9 million, down 59 per cent on the previous corresponding period (PCP) but up 27 per cent in the third quarter. Its infant milk formula (IMF) also showed promising growth, with group gross revenue up 49 per cent in the third quarter.

Despite being down 59 per cent on the previous corresponding period (PCP), the company remains optimistic about its performance.

In Australia, Bubs fourth-quarter gross revenue of $51.1 million was up 7 per cent year on year and down 3 per cent on the third quarter. The company said with continued shared market growth and additional stockists – including Baby Bunting and Big W – it finished the year strongly with full-year net revenue up 19 per cent and finishing above the guidance range at $15.2 million.

The company’s expansion in the US showed strong results, with gross revenue of $11.8 million for the fourth quarter, up 45 per cent on year and 97 per cent on the third quarter.

Bubs achieved its first $1 million month on the e-commerce platform Amazon in May and continued to see sales growth in June. The company said it remains on track to meet all regulatory requirements for permanent access to the US market. 

Meanwhile, its China business faced challenges due to a dispute with entities affiliated with AZ Global, resulting in excess stock in trade and subdued sales. Fourth quarter gross revenue in the country plummeted 96 per cent on PCP and 55 per cent against the third quarter. 

However, Bubs says it remains hopeful as it sees modest growth and sell-through in cross-border e-commerce for Caprilac, with its sales volume stabilised.

The company has also outlined a multi-channel growth strategy with new leadership and trade partners in China.

Australian tanning and skincare brand Bondi Sands will be acquired by Kao Corporation, a $26 billion Tokyo-listed chemicals and cosmetics giant.

Bondi Sands, the country’s most recognisable self-tanning brand, was founded in Melbourne in 2012 and is now sold in more than 32 countries, including the US and the UK.

Kao Corporation subsidiaries Kao Australia and Kao USA are set to own the Australian brand in a cash deal estimated to be worth $450 million, according to The Australian Financial Review.

Bondi Sands co-founder and chief executive Shaun Wilson said his brand shared values and principles with the Japanese company, which would help it grow globally.

“The integration of Kao’s renowned scientific and technological resources into our operations is an unparalleled opportunity that will significantly contribute to the exponential growth of our brand, empowering us to further expand our product offerings and advance our research and development initiatives,” Wilson said in a statement issued by Kao.

“With this partnership, we can now confidently explore untapped markets, reach more customers around the world and continue to fulfil our company mission.”

Kao’s interest in Bondi Sands lies in the brand’s extensive range of broad spectrum sunscreens, most of which are SPF 50+.

The Japanese giant said it had nominated skincare as a medium-term growth driver and was seeking “aggressive investments” to grow through skin protection and sun-care products. Bondi Sands will give the Tokyo-based giant solid footing in the self-tanning market.

Karen Frank, president of Kao’s consumer care business in the Americas, Europe, Middle East and Africa, said Bondi Sands would be a perfect fit for its portfolio, which includes John Freida, Biore, Jergens, Curel and more.

“Quality, innovation, environmental responsibility, accessibility and community are at the forefront of everything it does, ideally aligning Bondi Sands to our own brand values and corporate philosophy,” Frank said.

“The addition of Bondi Sands to our consumer family of brands will greatly advance our mission to be the pre-eminent leader in the global skin protection business and continue our journey of offering diverse products that promote a ‘kirei’ [clean and beautiful] lifestyle that is healthy, inclusive and sustainable for all.”

Bondi Sands and Shaun Wilson have been contacted for comment.

The deal is subject to “normal regulatory review and approval” according to Kao’s statement.

Last year, Bondi Sands faced a US class action for alleged greenwashing over its claims that its sunscreens were “reef friendly”. The self-tanning brand’s first batch of products turned customers green and had to be recalled.

“It was not the greatest start,” Wilson said in January 2020. “The quality control of one of the ingredients was not up to scratch and we had to do a recall. We faced up to it and were honest with our wholesaler Priceline and they gave us another chance.”

Bondi Sands is the latest in a string of Australian brands that have been sold to international conglomerates.

Craft gin distillery Four Pillars was sold to Japanese-owned beverages giant Lion in early July, while Melbourne-born luxury cosmetics brand Aesop was snapped up in April by Brazilian owner Natura & Co Holding for $US2.53 billion ($3.7 billion) in the biggest deal for a luxury brand in Australian history.

Japanese giant Suntory will merge its two drinks businesses in Australasia to create a $3 billion-a-year company that will see alcohol brands including Jim Beam and the No.2 ready-to-drink spirits brand -196 brought under the same roof as non-alcohol products.

The non-alcohol brands include Australia’s biggest selling energy drink, V Energy, which is outpacing fierce rival Red Bull. It also sells Maximus and Boss Coffee.

The new Suntory Oceania entity will be up and running by mid-2025, and means Coca-Cola Europacific Partners will hand back a contract after 16 years of Coca-Cola entities operating the local manufacturing, sales and distribution of the Suntory Beam alcohol brands.

Coca-Cola Amatil, the former ASX-listed Coca-Cola bottler in Australia which previously held the rights since 2009, was swallowed by Coca-Cola Europacific Partners in a $9.8 billion buyout in 2021.

Darren Fullerton, chief executive of Frucor Suntory, said the non-alcohol business had generated sales growth of 10 per cent-plus in calendar 2022 and sales continued to be solid. The alcohol brands had also been generating good growth of high single digits. “Both of these businesses are in significant growth,” he said.

Suntory has started building a $400 million manufacturing and distribution facility at Ipswich in Queensland on a 17ha site which will have an initial production capacity of 20 million cases of ready-to-drink products annually. It will give extra impetus to Suntory’s growth plans. There is also a production site in Auckland.

“It’s been a bit of a sleeping giant in this part of the world,” Mr Fullerton said.

Suntory had been weighing up its strategic options and had decided that to take full control of both businesses and merge them into one was the best way to accelerate growth.

“The timing, for a number of reasons, was right,” he said.

‘Hourglass effect’

The two businesses currently operate separately and have a combined workforce of 1100.

Beam Suntory brands include Jim Beam, Maker’s Mark, Canadian Club whisky and Hibiki Japanese Whisky, but one of the biggest profit drivers is the ready-to-drink brands known as -196, a low-sugar product which is hugely popular in Japan.

It first arrived in the Australian market in 2021 and has risen to be the No.2 light RTD in Australia. The name comes from the extremely low temperature at which lemons are frozen before being crushed into a powder used in the drink.

The Frucor Suntory business’ flagship product is V Energy, in a distinctive slim green can. It is the No.1 energy drink in Australia, having overtaken Red Bull.

Mark Hill, managing director of Beam Suntory, said Coca-Cola entities had done a good job in overseeing the alcohol brands, but it was time for Suntory to take control and step up the growth.

“It was the end of the agreement. It’s nothing against them,” Mr Hill said. Coca-Cola Amatil had signed in 2015 a new 10-year agreement to make, sell and distribute the alcohol brands in Australasia for the following decade.

He said there had been some softness in parts of the alcohol market in the past few weeks as cost-of-living pressures increased in households.

“We’re only starting to see that in the past couple of months,” he said. “In some areas, there is a bit of an hourglass effect.”

He explained that the high-end premium segment was still strong, with affluent drinkers still spending up, and that the bottom end of value buyers was still solid. But cutbacks in discretionary spending by middle Australia had caused softening in the mid-market.

Across the two businesses of alcohol and non-alcohol brands, the combined retail value of annual sales is around $3 billion for sales in liquor chains, supermarkets, convenience stores and hotels and bars.

The alcohol brands generate solid sales in liquor chains such as Dan Murphy’s and BWS owned by Endeavour Group, and the liquor chains run by Coles Group.

Beverage companies Beam Suntory and Frucor Suntory have announced a $3 billion multi-beverage partnership in Australia and New Zealand for premium spirits and non-alcohol segments.

The combined company will become the fourth-largest ANZ beverage group in Oceania taking over “full end-to-end control” of its portfolio in manufacturing, sales, and distribution.

The deal follows an announcement yesterday by Coca-Cola Europacific Partners (CCEP) and Beam Suntory that they would end their 16-year partnership in Australia and New Zealand, effective upon the expiry of the contracts on June 30 and December 31, 2025, respectively.

Despite the ownership overlap, the two companies are not merging, but partnering up.

Frucor Suntory CEO, Darren Fullerton, said the new venture is about “bringing the best” of Suntory to Oceania.

“With the ability to accelerate our growth trajectory, we strongly believe it will redefine market dynamics and offer more consumer beverage moments from sunrise to sunset, unlocking innovation for our customers across retail and hospitality industries.”

Mark Hill, MD of Beam Suntory Oceania, said the collaboration demonstrates the company’s belief in the growth potential of the Australian and New Zealand markets.

The business has also made a $400 million investment in the construction of a new net zero facility in Ipswich, Queensland which will complement its current manufacturing operations in Auckland.

The new Queensland site will become home to additional beverage processing, packaging, warehousing and distribution operations and will be able to produce 20 million cases initially.

It is expected to be operational by the middle of next year and will assist in manufacturing more than 50 million cases in the future.

Although preparation is currently underway, the partnership will only become effective from mid-2025 in Australia and 2026 in New Zealand.