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Woolworths boss Brad Banducci says shoppers have returned to doing their weekly grocery shop on weekends, but must now face up to paying more as inflation makes itself felt in every aisle.

The supermarket giant revealed on Thursday that food prices across its Australian supermarkets rose 7.3 per cent in the September quarter, with fresh produce spiking even more as inclement weather and supply chain pressures hit fruit and vegetable producers.

“In the last month or so we’ve started to see Sundays become our major shopping day - which means customers have got far more routine and habit [than during COVID],” Banducci said.

But some of these shoppers have started to make tough choices about what goes in their trolleys, with signs people are trading fresh produce for frozen food, or moving to canned goods and cheaper home brand items.

The days of the $6 iceberg lettuce might be over, but the supermarket chain is still seeing price rises from producers and supply challenges across its fresh food range, Banducci added.

Challenges with corn and potato crops were also leading to issues with the supply of frozen products, and there have been delays to in-season fruits coming into stores at good prices, meaning consumers have to wait longer than usual for mangoes and cherries.

Banducci made his comments after Woolworths reported a 1.8 per cent rise in group sales to $16.3 billion for the 14 weeks to October 2 - the first quarter of its financial year. But Australian food sales weakened by 0.5 per cent compared with this period last year, when more shoppers were stuck at home due to the pandemic lockdowns.

Inflation continued to accelerate across the quarter, with the average price of food up 7.3 per cent in Australia, and 5.3 per cent higher in New Zealand.

The company did not specify the exact jump in fruit and vegetable prices during the quarter, but said there had been “double-digit” increases in this category.

Last week, Woolworths’s rival Coles confirmed it had seen inflation of 7.1 per cent across its supermarkets, with prices for fresh food up 8.8 per cent.

Woolworths’-owned discount department store Big W continued to benefit from the end of retail lockdowns, with total sales hitting $1.2 billion for the quarter, up 30.1 per cent on the same period last year. Online sales at Big W more than halved though in a sign that people have gone back to the shops rather than shopping on the internet.

UBS analysts said Woolworths’ numbers had come in below estimates, noting that Australian food sales had dropped 0.5 per cent despite inflation jumping during the quarter.

Despite the inflationary challenges, Banducci said that with 51 days to Christmas the company was focused on delivering customers an affordable festive offer.

“We are seeing strong early sell-through of seasonal lines, and we remain cautiously optimistic for the period ahead,” he said.

Woolworths shares opened lower amid a broader sell-off on the Australian sharemarket, and closed 3.5 per cent weaker at $32.05.

Dairy giant A2 Milk chief executive David Bortolussi expects to send a plane full of its custom-made infant formula to the US by late December or early January, having finally found a way into the lucrative market.

However, he is sober about how much market share and earning gains the win will deliver in the short term, given the freight and reworking costs involved.

Dual-listed A2 is preparing to manufacture infant formula made specifically to US requirements after receiving the green light on Thursday morning from the US Food and Drug Administration (FDA) to export its product.

Bortolussi said he was delighted to be able to supply its product to the US as the country continues to grapple with a national infant formula shortage sparked in February after a major infant formula plant in Michigan was forced to shut down following the discovery of a fatal bacterial infection.

“It’s an important longer-term opportunity, but the near-term impact may not be as material,” Bortolussi said. “The longer-term success of our business will depend on how well we market our product and how well that is received by consumers in the marketplace.”

Investors cheered the update, with A2’s shares rising 4.2 per cent to $5.49.

While getting its product into the US is a win for the company, it will have to make a product almost entirely from scratch. The formula inside the tins will be the same as a2 Platinum formula sold elsewhere, it must have different scoops, mixing instructions and labelling requirements to meet US rules.

“We don’t have that product in inventory at the moment. We’ll need to commence manufacturing that product as quickly as possible with [supply partner] Synlait Milk ... within the next couple of weeks,” Bortolussi said.

After the product is prepared, it will be subject to a 25-day quality assurance process before being ready to export to the US, in late December or January 2023.

US FDA’s approval comes more than five months after A2 Milk’s smaller rival Bubs Australia received the green light. On May 16, the US Food and Drug Administration (FDA) released a temporary measure that provided a fast-tracked regulatory process for global companies to help patch the shortage.

ASX-listed Bubs Australia was the first manufacturer in the world to submit its application, and secured approval from the FDA shortly after in late May. Australian brand Bellamy’s Organic secured approval on July 5.

A2 Milk submitted its application on May 26, but had to wait for months before being told by the FDA on August 10 that it had its submission delayed, along with a number of other applicants.

The company expects to sell up to 1 million tins of formula in the second half of the 2023 financial year. Despite gaining a foothold in the massive $6.1 billion baby formula market, A2 Milk expects earnings to be “incremental” as it will be offset by air freight costs, the cost of reworking the formula into new tins, and marketing and trade costs.

“We don’t underestimate the challenge in carving out a significant market share for our brand in the US market over time, but we’re up for that challenge, and we’re going to invest in that and execute the best that we can to achieve that,” Bortolussi said.

A2 Milk is awaiting to hear from the US FDA on whether it will send government-issued planes to collect product under ‘Operation Fly Formula’, through which Bubs was able to send millions of tins.

“We just haven’t received clarification from FDA,” said Bortolussi. “We would obviously like to be able to utilise that; it would be a big advantage and help expedite the process.”

Though global manufacturers have been able to enter the tightly held US baby formula market through the temporary FA measure, 95 per cent of the market is still held by the three dominant domestic players: Abbott’s, Reckitt and Nestlé.

A2 Milk is increasing production amid FDA’s approval and has assured that it would continue to meet regular supply to other markets, such as China. It will provide a market update about US earnings gains when it presents its half-yearly results or potentially earlier.

The FDA has published transition guidance that allows enforcement discretion-approved companies seeking a permanent pathway to the US to extend the temporary period until October 18, 2025.

Citi analyst Sam Teeger expects A2 Milk’s 1 million tins will add “low single digit upgrades” to the company’s 2023 earnings and said Bubs’ first quarter results demonstrated the US market may be more challenging than expected.

“Other brands that have also received enforcement discretion may have not yet made any sales in the US, suggesting execution is challenging despite product shortages,” Teeger said.

”While A2 may also face these same issues, the company’s existing US operations may be relatively better placed to oversee retail merchandising, and arguably it has a relatively more established brand in the eyes of consumers.”

A2 Milk currently sells liquid milk across major US supermarkets and retailers.

“However, A2 won’t have the same first mover advantage which essentially gave Bubs free marketing,” Teeger said.

It’s also unlikely the US will send government-issued planes to collect A2’s product, he added.

Woolworths Group sales rose 1.8 per cent in the first quarter to $16.36 billion, but turnover in its retail food business fell on both sides of the Tasman.

Across its Australian food division, sales during the 14 weeks to October 2 fell 0.5 per cent to $12.2 billion while comparable sales declined 1.1 per cent. In Woolworths Retail (both stores and e-commerce), sales fell 0.6 per cent impacted by a decline in items as well as supply chain challenges.

Australian B2B sales increased by 26 per cent to $1.19 billion driven by a 36.1 per cent increase in B2B Food.

In New Zealand, sales declined by 2.5 per cent to $2 billion while comparable sales declined by 3.3 per cent. The retailer says customers put “fewer items” in their baskets with comparable items per basket declining by 14.3 per cent. E-commerce sales growth and penetration continued to increase by 5.9 per cent in the quarter.

Big W sales increased 30.1 per cent to $1.19 billion driven by customers returning in-store. All categories performed strongly with a shift back towards everyday and home and apparel products. Online sales dipped 51.8 per cent to $112 million.

Due to inflation, average prices across its Australian Food business increased by 7.3 per cent and 5.3 per cent in New Zealand.

Brad Banducci, CEO of Woolworths Group, said customer shopping behaviour and the trading environment continued to normalise during the quarter.

“We continue to see early signs of customer purchasing habits changing but it remains unclear how much of this relates to cost-of-living pressures compared to Covid normalisation,” he said.

“Ongoing supply chain volatility and the possibility of another wet summer will be key challenges to navigate but we are seeing strong early sell-through of seasonal lines and we remain cautiously optimistic for the period ahead.”

Some of the world’s biggest consumer goods companies, including PepsiCo, Mars and Nestle, are almost certain to miss a target to make plastic packaging more sustainable by 2025, according to a new report published on Wednesday.

The study by the Ellen MacArthur Foundation and the United Nations Environment Programme also revealed that some companies – including Coca-Cola and Pepsi – are using more virgin plastic despite a pledge to reduce its use.

The report comes as U.N. members are due to meet in Uruguay this month to start negotiations on the first ever global plastics treaty, which is aimed at reining in soaring waste pollution choking marine life and contaminating food.

Some U.N. members are pushing for a pact that includes legally binding targets to increase recycled content in packaging and use less petroleum-derived virgin plastic, rules that would have financial implications for the consumer goods and petrochemical industries.

Pepsi, Coca-Cola, Nestle and Mars did not immediately respond to requests for comment.

Dozens of major brands have in recent years set targets to increase plastic recycling and reduce the use of single-use packaging in partnership with the Ellen MacAurthur Foundation, as part of efforts to burnish their green credentials.

The headline pledge was that 100 per cent of plastic packaging would be reusable, recyclable or compostable by 2025, but this goal will “almost certainly be missed by most organisations”, the environmental group’s report said.

Greenpeace said the report is evidence that voluntary corporate targets have failed and called on the U.N. to forge a treaty that forces governments and companies to use less single-use plastic packaging.

“This underlines the need for governments to ensure that the global plastic treaty … delivers major reductions in plastic production and use,” said Graham Forbes, Greenpeace’s USA Global Plastics Project Leader.

“Anything less than this is a disservice to our communities and our climate.”

McDonald’s Australia is to inject more than $130 million into opening 19 new restaurants and renovating existing stores.

The fast food giant has already opened eight new stores in NSW, Queensland, and Tasmania this year and will open 11 additional stores across the country before the end of this year.

Aside from opening new outlets, the company said it would also renovate over 80 of its existing stores, including improvements in the design, efficiency and functionality of the drive-thru, deliveries, and dining rooms to provide a better customer experience.

David Howse, chief support officer of McDonald’s Australia, said that the company is focused on opening new stores in residential growth areas close to transport and infrastructure in both metro and regional locations.

“Most new restaurants will feature a McCafe, digital ordering kiosks, dual lane drive-thrus and McDelivery partner rooms, allowing customers to continue enjoying Macca’s how and when they like,” said Howse. 

He added that the company is also working to reduce its environmental impact on new restaurants by using LED lighting, solar panels, heat recovery water systems, and recycled material for wheel stops and dining room tiles.

“The restaurants we have opened to date have received an extremely positive response from the local community, which makes us excited for our plans to continue to invest across the country,” Howse concluded.

Liquor company Lark Distilling has named Satya Sharma its new CEO, effective on May 1.

Sharma is presently the regional MD Southeast Asia and Australasia for William Grant & Sons, and a member of the company’s Branded Business Unit, which is in charge of the company’s global brands.

“The board has been working on CEO succession, and we are delighted to secure a CEO of Satya’s calibre and experience to lead the company through its next phase of growth and expansion,” said Lark chairman David Dearie. 

Sharma used to hold many roles during his 10-year journey with William Grant & Sons in Singapore, China, and the UK, including head of business strategy & development, interim finance director Apac, and head of commercial.

Prior to that, Sharma worked for Campbell Arnott’s and Pitcher Partners as a senior manager in corporate finance when he was in Australia. 

Laura McBain, the company’s current temporary MD, will remain CEO position until May 1, after which she will continue to serve as a non-executive director.

“According to IWSR data, William Grant & Sons have more than doubled its’ Asia Pacific sales over the last five years,” Dearie added. 

Superannuation giant Aware Super and a syndicate of elite Australian athletes have backed Mexican food chain Guzman y Gomez in a share sale which values the company at $1.5 billion.

Guzman y Gomez founder Steven Marks said the investments were a testament of the group’s recent past performance and plans for the future. “We’re well positioned to build and bring even more [Guzman y Gomez eateries] to life here in Australia and globally,” he said.

The investors have not disclosed the value of the secondary share sale, but the investment was led by Aware Super, which has $150 billion worth of Australians’ retirement savings under management.

The deal values the Guzman y Gomez at a fully diluted market capitalisation of $1.5 billion.

Athletic Ventures, the investment syndicate founded by recently retired Greater Western Sydney Giants player Matt de Boer, also made its third consecutive investment in Guzman y Gomez as part of the sale.

The group, which boasts 100 members including Test cricketer Mitchell Starc and Wallabies captain Michael Hooper, has been on the lookout for high-growth start-up businesses.

De Boer said the athlete group’s belief in the Guzman y Gomez business “grows stronger by the day”.

“Most importantly as an athlete community, we understand deeply what high-performance looks like, and continue to be blown away by the quality of the management team and their continued execution,” he said.

The United Nations food agency’s world price index fell for a sixth month in a row in September, receding from all-time highs posted earlier this year after Russia invaded Ukraine.

The Food and Agriculture Organization (FAO) said on Friday that its price index, which tracks the most globally traded food commodities, averaged 136.3 points last month versus a revised 137.9 for August.

The August figure was previously put at 138.0.

The index has fallen from a record of 159.7 in March. The September reading was, however, 5.5 per cent higher than a year earlier.

The latest drop was driven by a 6.6 per cent month-on-month fall in vegetable oil prices, with increased supplies and lower crude oil prices contributing to the decline.

Sugar, dairy and meat prices all slipped by less than one percentage point, relieving inflationary pressures.

By contrast, FAO’s cereal price index rose 1.5 per cent month-on-month in September, with wheat prices climbing 2.2 per cent because of concerns over dry crop conditions in Argentina and the United States, strong EU exports and heightened uncertainty over access to Ukrainian Black Sea ports beyond November.

Rice prices rose 2.2 per cent, partly because of worries over the impact of recent severe flooding in Pakistan.

In separate cereal supply and demand estimates, FAO lowered its forecast for global cereal production in 2022 to 2.768 billion tonnes from a previous 2.774 billion tonnes.

That is 1.7 per cent below the estimated output for 2021.

“A lower global coarse grain production forecast makes up the bulk of this month’s overall cutback, as adverse weather continued to curb yield prospects in major producing countries,” FAO said.

World cereal use in 2022/23 is expected to surpass production at 2.784 million tonnes, leading to a projected 1.6 per cent fall in global stocks compared with 2021/22 to 848 million tonnes.

That would represent a stocks-to-use ratio of 29.7 per cent, down from 31.0 per cent in 2021/22 but still relatively high historically, FAO said.

Cereal and snack company Carman’s has made its first-ever acquisition – of Adelaide-based snack brand Fruit Wise. Details of the purchase have not been disclosed.

Carman’s founder Carolyn Creswell said the purchase marked an exciting venture for the company as it brings together two like-minded businesses with a passion for delicious food.

“My kids have loved Fruit Wise fruit straps for over 15 years, so much so they were the number one school lunchbox request,” said Creswell.

“Given how much we all loved the product, I decided to pick up the phone to see if there was any opportunity to work together.” 

After a year of discussions, Creswell said the parallel similarities and outlook on healthy snacking helped finalise the deal. 

“It’s truly a moment that I’m so proud of, and I just can’t wait to watch Carman’s continue to grow,” she added.

Creswell explained she holds the Australian-owned brand close to her heart, which is why Fruit Wise will remain in its location at Adelaide Hills.

“With so much uncertainty in the world over the last two years, locally made products are becoming increasingly important to Aussie families,” she added. 

 “That’s why I place so much pride in the fact we’re 100 per cent Australian-owned and manufactured.” 

Bridget Beal, MD at Fruit Wise, said being family-owned for 15 years, the brand wanted to ensure it was in good hands before “passing over the reins”.

“After speaking with Carolyn, we knew straight away that this was the right move for Fruit Wise,” proclaimed Beal. “We can’t wait to watch Fruit Wise grow under the care of Carman’s!” 

Liquor retailer Endeavour Group says Australians are rushing to book in a pub lunch for Christmas as the company’s buoyant hotels business offsets the predicted slowdown in retail sales.

Boss Steve Donohue said Endeavour’s hotels segment had benefitted from bigger groups of diners making bookings in the first weeks of the new financial year, while Christmas reservations were well up on last year.

“We are seeing larger groups coming together - a 10 per cent increase over the size of the booking,” he said.

“We expect to serve around 44,000 Christmas covers - so Christmas lunches, Christmas dinners - and at the moment our forward bookings are double what they were at the same time a year ago. We have demand for about a third of the seating capacity that we’ll have for Christmas already.” Those figures put the business in a strong position into the end of the calendar year, he said.

Endeavour, which operates the Dan Murphy’s and BWS chains, generated just over $3 billion in sales for the first quarter of the 2023 financial year, with sales from its hotels up 90.8 per cent to $538 million compared to the COVID-hit first quarter of 2022 as customers spend up on food and accommodation.

Asked about cost of living pressures, Donohue acknowledged that families were looking for better value, and the affordability of the pub experience could be a factor in increased interest in hotels.

“A trade down out of fine dining, well, that is potentially a factor at play out there.”

As expected, sales across the company’s retail drinks business have slowed, however, with sales down 6.2 per cent compared with the same time last year as the incredible demand seen throughout COVID lockdowns continues to wane.

The retail business generated $2.5 billion in sales during the third quarter, which still represents a three-year compound annual growth rate of 4.4 per cent.

Donohue was still upbeat about retail sales, however, noting that the festive season rush had always been a core part of the company’s annual sales.

Last year’s Christmas trading period was marked by supply chain disruptions across the business, but the business has worked hard to ensure it has enough stock over the next couple of months.

“It worked out ok [last year], but we don’t want those sorts of challenges this year. We are pulling forward some of our inventories in store a bit earlier.”

Endeavour shares jumped over 2 per cent on the update and closed the session at $6.97.

UBS analysts noted that while the slowdown in retail sales had been predicted there were some bright spots for Endeavour, including the growth of its specialist wine, beer and spirits business, Pinnacle.

“Reopening leverage is evident in the strong Hotels result as the consumer socialises,” Shaun Cousins said in a note to clients.