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Australian consumers now have more plant-based options after Coles added the alt-meat brand Get Plant’d into 800 stores.

The range features six variants: Bacon, Deli-Style Pepperoni, Deli-Style Chicken Slices, Roast Chicken Fillets, Roast Duck and Roast Pork. All the Get Plant’d products are sourced from plant-based ingredients such as wheat (seitan) and soybeans (texturised soy protein).

Founded by Cale Drouin, an Australian restaurateur and food creator, Get Plant’d aims to offer delicious flavours and more simple but functional plant-based choices for customers.

“The whole Get Plant’d range places an emphasis on delicious taste and ease of functionality,” Drouin said.

“Our goal is to make it simple for shoppers to pick up plant-based meat, and to enjoy this product as part of their favourite meals or snacks. People can Get Plant’d without having to commit to specific dietary choices full-time.”

Drouin has more than a decade’s experience in the plant-based sector. He said the demand for vegan food is rising in Australia and plant-based protein has a larger role in Australia’s future food security, especially when the global supply chain is being affected by the pandemic.

“Australia’s national food security strategy relies heavily on subsiding the meat and dairy industries, even though animal agriculture requires enormous natural resources to operate,” he added.

“Shifting government policies to prioritise plant-based protein would help to ensure Australians have consistent access to safe, homegrown crops that are more environmentally and economically sustainable.”

Kate Thomson has been appointed as Ampol’s new executive GM for its Australian retail business.

She takes over from Joanne Taylor who has resigned after six years with the company.

Thomson has been with Ampol for three years, holding key roles including GM of retail operations and head of retail excellence. Prior to that, she held senior positions in leading consumer brands including ANZ Banking Group and McDonald’s Australia.

“Kate has consistently delivered operational excellence and strong risk management to the team and has successfully built sustainable structures and governance across risk, safety and environmental management, whilst leading the field operations team,” said Matt Halliday, Ampol MD and CEO.

He said she played an important role in the company’s delivery of its convenience retail growth strategy during the past three years.

“With over 6000 fantastic retail employees and a national network across key demand centres, we seek to evolve our retail offering to support the changing needs of customers and leverage the growing convenience market,” said Thomson.

Woolworths Group has overcome the impact of Omicron and severe flooding to post a 9.7-per-cent increase in like-for-like sales during the third quarter to $15.123 billion. 

The growth rate was significantly higher than the 3.9-per-cent increase reported by archrival Coles Group last week. E-commerce sales soared 33.4 per cent year on year reaching $1.456 billion. 

In the company’s core Australian food business, sales rose by 5.4 per cent, however average prices rose by 2.7 per cent reflecting the “widespread industry cost pressures,” said CEO Brad Banducci. Online food sales rose by 38.1 per cent. 

Banducci said the ongoing impact of Omicron, as well as widespread flooding, resulted in another challenging quarter for the business. 

“Despite the unfailing efforts of our teams, high levels of Covid-related team absenteeism and the disruption to our broader supply chain resulted in inconsistent customer shopping experiences and negatively impacted our customer metrics,” he said. Last month, entering the final quarter, there was more stability across the group but store stock service levels remain below normal levels.

The Big W discount department store business reported a 3.5-per-cent decline in sales, due to customers either being restricted from shopping in stores due to state government Covid-related rules or a reluctance by consumers to venture out in public. However, the business had shown an 18.3-per-cent increase in the same quarter last year and the chain’s three-year compound annual growth rate is running at 7.7 per cent. Online sales increased by 21.2 per cent. 

“Trading momentum in Q4 to date has continued in Australian Food and Big W with strong Easter seasonal trade,” said Banducci. 

Challenging quarter for New Zealand

Across the Tasman, the New Zealand business, trading as Countdown, experienced “a very challenging quarter” Banducci said. 

“The impact of Omicron, which was felt later in the quarter, led to supply-chain disruption and out of stocks that peaked in March.”

While total sales increased by 3.8 per cent, average prices increased by 3.6 per cent. Online sales rose by 18.3 per cent.

The company expects the New Zealand food business to record a pre-tax profit in the range of NZ$120 – $140 million for the second half, which would represent a decline of 16-28 per cent on year. 

“The expected reduction in profit is largely a function of higher Covid costs associated with keeping our customers and team safe and minimising disruption to our supply chain.”

Company-wide, Woolworths is focusing on “returning to a more stable operating rhythm and delivering consistently good shopping experiences for our customers” during the current fourth quarter.

Beauty and wellness company BWX says it expects to deliver strong underlying revenue growth based on unaudited internal accounts year to date.

The group owns brands including Sukin, Nourished Life, Flora & Fauna, Go-To, Andalou Naturals and Mineral Fusion. 

The business expects underlying revenue to range between $240 and $250 million for this financial year. Underlying EBITDA should range between $34 and $37 million.

The impact of higher operating expenses, ongoing elevated freight and supply chain costs due to Covid and recent acquisition investments failing to meet revenue growth expectations dulled performance during the company’s second half.

Group CEO Rory Gration said the business will achieve approximately $5 million in cost-out initiatives in the next financial year. 

“BWX’s in-store revenue performance has accelerated from the first half of the year and the business is supported by strong brands and an ability to scale distribution in key markets and sales channels.

“Initiatives for reducing our cost base are a key priority, supported by improved visibility and cost controls to ensure sustainable revenue growth,” he added.

The group is focused on centralising its digital warehouse in its Clayton manufacturing facility. The new centre boasts automated packing and storage processes and margin benefits from private label manufacturing. Inventory will also likely remain elevated as manufacturing increases but it is expected to normalise in the first half of next year.

The chief executives of Australia’s two largest private employers have thrown their support behind an increase in workers’ wages amid persistently rising inflation and a tightening labour market.

Woolworths boss Brad Banducci and Wesfarmers managing director Rob Scott both made comments on Tuesday supporting wage rises, with Banducci backing calls from industry body the Australian Retailers Association for an increase in the minimum wage in line with the underlying rate of inflation.

Scott, who oversees the operation of major retailers Bunnings, Kmart and Target, told the Macquarie Australia Conference he expected to see rising wages “across the board” in the year ahead, something he welcomed in light of the rising level of inflation.

“From a Wesfarmers point of view, I see real wage growth as a very good thing. Real wage growth is a good thing for the economy, and if it’s good for the economy, it’s generally good for Wesfarmers,” he said.

Banducci, whose company employs about 200,000 Australians, was also supportive of wage rises, though noted that there was no “silver bullet” that would fix Australia’s inflation woes. The retailer said shoppers could be facing a double whammy of price rises from suppliers in the next 12 months.

“We’re very clear that while we need to deliver value for our customers, we also need to make sure that our team can have salaries and wages that keep pace with the underlying increase in the cost of living,” Banducci said.

The supermarket boss said so far around 40 per cent of the company’s supplier base had requested price increases, and the supermarket was in negotiation with an additional 20 per cent. At Woolworths’ third-quarter sales results on Tuesday, the company reported inflation across its food business of 2.7 per cent, lower than rival Coles’ 3.3 per cent.

“There are indications from some of our larger suppliers that within 12 months, they will come back for a second cost increase,” Natalie Davis, Woolworths’ head of supermarkets told analysts. “That’s really reflecting the ongoing cost pressures they’re seeing on commodity prices, manufacturing costs and international freight.”

Banducci’s remarks supporting wage rises are at odds with other retail bodies and fellow supermarket executives, with Coles’ boss Steven Cain warning last week of the danger of wages rising in tandem with inflation, as he called for an increase in immigration rates to offset rising prices.

The comments come as Woolworths reported a strong start to the new year, with sales from January to March rising 9.7 per cent across the business to $15.1 billion. This included comparable growth of 4.4 per cent at the company’s key supermarket division to $11.4 billion, ahead of analyst estimates.

Despite these strong sales results, Banducci said the quarter had been challenging, with floods, supply chain disruptions and high levels of COVID-related absenteeism hurting the supermarket’s standing with customers.

However, the company said trading had been strong so far in the fourth and final quarter of the financial year, with the business now focusing on “returning to a more stable operating rhythm.”

Costs relating to COVID-19 have continued to fall, coming in at $66 million for the quarter, with the business saying it is continuing to look at cutting additional pandemic-related costs where possible.

On Tuesday, the Reserve Bank raised interest rates by 0.25 percentage points to 0.35 per cent, the first-rate rise since 2010. Speaking ahead of the decision, Banducci would not comment on what this might mean for shoppers, saying instead the supermarket was focused on “delivering value for customers”.

Shares in Woolworths had gained 0.6 per cent on Tuesday by mid-afternoon but fell in line with the broader market following the RBA’s decision.

Consumer prices jumped by 2.1 per cent through the first three months of the year, taking annual inflation to its highest level in more than 20 years.

In figures that go to the heart of the election campaign debate about the cost of living, the Australian Bureau of Statistics on Wednesday reported a combination of soaring petrol prices, home building costs and university costs drove inflation to a level last this high in September 2000.

The March quarter result follows a 1.3 per cent increase in prices in the December quarter.

In a major concern for the Reserve Bank, which meets on May 3, the key measure of underlying inflation also pushed higher in the quarter by 1.4 per cent. The annual underlying measure is now at 3.7 per cent, the highest level since March 2009.

Head of prices statistics at the ABS, Michelle Marquardt, said the most significant contributors to the rise in consumer prices were new dwellings (up 5.7 per cent), fuel (up 11 per cent) and tertiary education (up 6.3 per cent).

“Strong demand combined with material and labour supply disruptions throughout the year resulted in the highest annual inflation for new dwellings since the introduction of the GST,” she said.

“Annual price inflation for automotive fuel was the highest since the 1990 Iraqi invasion of Kuwait.”

The 2.1 per cent quarterly and 5.1 per cent annual results are much higher than expected by financial markets, analysts, the federal Treasury and the Reserve Bank.

It also puts pressure on the major parties about real wages growth. Wages have grown by 2.3 per cent over the past year, meaning many people have suffered a 2.8 per cent fall in real incomes.

The figures also highlighted some of the pressures in the nation’s property markets.

Rents have jumped by 11.3 per cent in Darwin and by 9.7 per cent in Perth over the past year. While they lifted slightly in Sydney and Melbourne in the quarter, they are still running negative at an annual rate.

Both markets are expected to see stronger rental increases in coming months.

Perth experienced the highest capital city growth in inflation, increasing 3.3 per cent over the March quarter, while only Sydney and Adelaide saw inflation grow by less than 2 per cent. Melbourne experienced a 2.3 per cent increase in consumer prices, while Brisbane and Canberra saw growth of 2.2 per cent.

The ABS reported that prices for non-discretionary goods lifted by 3 per cent in the quarter to be 6.1 per cent up over the year. For discretionary goods, inflation is more subdued at 2.7 per cent annual.

Inflation across food groups rose 2.8 per cent due to higher costs in transport, packaging, fertiliser and ingredients, but Marquardt said inflation pressures were softened by government vouchers for dining out in NSW and Victoria.

“[The voucher programs] reduced out-of-pocket costs for meals out and takeaway foods,” she said.

“The grocery component of the group, which excludes meals out and takeaway foods, rose 4.0 per cent in the March quarter.”

Coles Group weathered what it described as significant Covid and flood-related disruptions during the third quarter to post a 3.9-per-cent lift in sales to $9.295 billion. 

The company said staff absenteeism related to isolation requirements during the Omicron outbreak led to “availability challenges and short-term impacts on Coles’ promotional program and disruptions to stores and distribution centres”.

Floods in South Australia caused “severe road and rail logistics disruptions into Western Australia, while flooding in NSW and Queensland saw the suspension of trading at 130 stores across its supermarket, liquor and convenience store networks. Twelve stores remained closed when the quarter ended on March 27. 

Coles warned cost price inflation was impacting suppliers as raw materials costs rose, along with shipping and fuel costs.  

The supermarket division recorded $8 billion in sales, also up by 3.9 per cent, while liquor division sales of $781 million were up by 2.9 per cent. The company’s Express c-store division saw a sales decline of 2.2 per cent to $269 million which the company says was related to Covid isolation and state Covid-19-related regulations. 

E-commerce sales soared 45 per cent as people chose to – or were forced to – avoid shopping in stores and the company invested in expanding its digital infrastructure and services.

“Traffic flows increased with workers returning to offices and children returning to school later in the quarter which was partially offset by the flood events and global fuel price increases.”

The company said it incurred around $65 million of Covid-19-related costs during the quarter, peaking at $30 million in January as requirements for team members to isolate in stores and warehouses, “the operation of shift bubbles and costs associated with administering rapid antigen testing in distribution centres”. 

Thank goodness for bananas.

Coles chief executive Steve Cain says the fruit is the supermarket giant’s best-selling product just now, helped by the fact it is a little yellow island of savings in a turbulent sea of inflation.

While bananas are 26 per cent cheaper than this time last year (and avocados are down 29 per cent), Coles saw food inflation in the March quarter hit 3.3 per cent.

Happily for Coles, that’s well under the 5.3 per cent figure for grocery price inflation reported for the March quarter in Wednesday’s official numbers, with Cain suggesting this shows Coles is doing a better job than its rivals at protecting customers from the worst of inflationary pressures spreading across the economy.

But Cain also made it clear that inflation on supermarket shelves is just getting started, with the protracted process of negotiating with suppliers on price rises still at a relatively early stage.

Coles and its suppliers held prices basically flat in the December quarter, but Cain says increases in commodity prices, raw material prices, packaging prices, energy costs and transport costs is leading to an increase in the number of suppliers asking Coles to raise prices.

But these negotiations take time and Coles is still to make decisions on many price requests, meaning the supermarket inflation story has a long way to run.

“You’ve got to bear in mind that we’ve gone from a situation of zero inflation in the last quarter to 3 per cent this quarter, and that number has been sort of steadily increasing during the quarter, because these things take time to agree and filter through,” Cain says.

‘Most disruptive quarter’

He’s forecasting inflation will continue not only into the June quarter but through 2023 as well. Which means the pressure on the RBA to keep raising interest rates will not abate for a while yet.

This inflationary backdrop occurred against what Cain describes as “the most disruptive [quarter] we’ve encountered so far”.

While the shadow of dislocations caused by the war in Ukraine hung over much of the quarter, Coles’ bigger battles were against the rampant omicron wave in January and the floods in South Australia, NSW and Queensland in February.

Cain was forced to eat $65 million of additional COVID-19-related costs in the quarter (compared to just $10 million in the March quarter of 2021) while the floods added another $30 million of costs – and that excludes lost profits from business disruption, which Coles will chase through its insurers.

In this context, Coles’ March quarter was solid. Group retail sales increased 3.9 per cent in the first quarter, with food sales of 4.2 per cent (3.9 per cent on a like-for-like basis) coming in towards the top end of analyst expectations.

Aces up the sleeve

As COVID-19 cases fall and customers shift away from local neighbourhood stores and back towards the mall-based stores where Coles is stronger than Woolworths, Cain should see a little extra sales momentum. And while the market won’t love the elevated costs, it will understand them.

Coles shares were broadly unchanged on Thursday and have traded sideways this year as the market puzzles out the state of the consumer.

The big question for investors now is how Coles responds to the inflation surge. On this point, Cain feels he has a few aces up his sleeve.

First, there’s the push into own brands that he has orchestrated over the past few years.

Cain added 100 new product lines to what he says is the biggest and broadest range of home brands in the country, accounting for about 31 per cent of supermarket sales; if consumers feel the pinch and need to start to trade down, Cain wants to be well-placed to offer them budget alternatives.

The Coles boss emphasises the company is taking a scientific approach to the idea of value, which, he points out, means different things to consumers in the inner city to those in the outer suburbs. Having the right own-brand products to meet these different needs essentially requires a retailer to think like a food manufacturer.

“You have to be very close to the pulse in terms of customer research and what’s going on,” Cain says. “We’re doing more research than ever, we are monitoring social media more than ever, we’re analysing FlyBuys data more than ever.

“It’s just the way of the world – if you’ve got information which you think will help customers and help provide a better offer or service, then that’s a great thing to be able to do.”

A second line of Coles’ response to rising prices is to push through price cuts where it can, increasing the number of 530 product lines on everyday low prices by 31 per cent, or 530 products, during the quarter.

Finally, it will hold the line on prices as much as possible. Cain is clearly sympathetic to suppliers’ pain, but he’s also determined to keep inflation at Coles well below that level seen in the broader grocery sector.

“The job of a good retailer is not just to wave everything through,” he says. “You’ve got to work for your customers.”

Jo Horgan is a talker. In her British accent, with vowels that remain unflattened despite living in Australia for almost four decades, Horgan talks and talks. Three times over the course of our conversation, politely inquiring members of her inner circle try to wrap us – her – up.

The first time, she waves them away, equally polite. The second, she invites them to sit. By the third time it’s clear to everyone that she has run out of excuses. “Right. I’m being cheeky now.”

By turns breathlessly effusive and pensively introspective, Horgan speaks with speed and obvious delight and then, shifting gears, she talks slowly and deliberately, selecting each word as if from a shelf in front of her. And yet she speaks. And she speaks. Because Jo Horgan has quite a lot to say.

Australia’s largest family-owned coffee company, Vittoria, has received buyout overtures from private equity groups and other large players as revenues rebound after a punishing two years in which it lost 20 per cent of its customer base.

But co-owner and chief executive Les Schirato said while revenues were rising strongly as more people returned to cafes and restaurants, the price of coffee beans had doubled and was putting a dent in profitability.

“We’ll have one of our worst years in terms of profits,” he said.

But revenues are returning strongly. Vittoria is on course to generate about $290 million in sales for 2021-22 and Mr Schirato said in the week leading up to Easter sales had roared back to pre-pandemic levels. “It’s been a monstrous rebound”.

Coffee bean prices are up 100 per cent, but Vittoria had absorbed a large part of that rise, and to date had only passed through about 7 to 8 per cent. But the pressure is building. “You have to ride the highs and lows,” he said.

Cafe owners have been through a tough time and are grappling with sharp rises in dairy prices and severe labour shortages.

“The cafes have been through hell,” he said. Mr Schirato said public annoyance at the rising price of a cup of coffee should be put in perspective as many cafes had only lifted prices by 20¢ to 30¢.

But inflation is on the march and is set to keep going.

“Inflation is certainly rising dramatically,” he said. Interest rates would rise too. Mr Schirato recalled the 1980s when his bank overdraft rate was 22 per cent and he was paying off a home loan with a mortgage rate of 18 per cent. He said many in the industry had not been through a period of sharply rising inflation.

Vittoria, which was established in 1958, had been winning extra customers because it is Australian-owned in an industry where there has been a string of buyouts by international conglomerates.

Mr Schirato, who owns the company with his wife, Luisa, said coffee drinkers increasingly want to know who owns a particular brand.

Australasian brand Allpress was bought by Japanese giant Asahi Beverages last year. Asahi owns the Carlton & United Breweries business, which makes beers including Victoria Bitter, Crown Lager and Carlton Draught.

Campos Coffee is owned by the publicly listed Jacob Douwe Egberts of the Netherlands after an acquisition last year, while Toby’s Estate Coffee changed hands in February in a $US158 million ($220 million) acquisition of the Suntory Coffee Australia business which included other businesses such as Atomic.

Mr Schirato said Vittoria knocked back a buyout offer from soft drinks group Coca-Cola Amatil more than a decade and a half ago. He said the overtures and preliminary buyout proposals had been coming regularly in the past two years. “We’re always getting private equity people wanting to come and talk to me,” he said. The answer is a polite no. Multi-national buyers have also been consistently knocking on his door.

Vittoria coffee is used in about 2 million cups of coffee a day. About 95 per cent of its sales are in Australia, with exports going to New Zealand, Asia and the United States. Ten years ago it was producing enough coffee for 1.2 million cups a day.

Vittoria, which was established in 1958, employs 200 people.

Mr Schirato said Vittoria was the No.1 brand in the supermarket channel, which had been a godsend in the past two years as an offsetting factor against lockdowns which seriously hurt the hospitality trade and caused about 20 per cent of its cafe customers to temporarily shut.