News

Fast food chain McDonald’s is set to inject $1 billion into opening 100 new restaurants across Australia and upgrading its existing network.

The company’s Australian chief Antoni Martinez says the company wants to capture the brand’s growing popularity and modernise its online offering.

“I just think when you look at our performance at the moment, it’s a great opportunity for us to accelerate that growth,” Martinez told The Australian.

“We are seeing customers and sales growth, we’re seeing opportunities to innovate and excite customers, because we’re seeing drivers in growth such as the delivery platform and drive-thru, in our McCafe.”

The company plans to spend about $600 million on 100 new stores in the next three years while $450 million will be spent on refurbishing.

Martinez added that customers are “keen” to see more McDonald’s in their local communities since about 85 per cent of all McDonald’s stores are owned by franchisees.

The brand also wants to supercharge its “convenience offer” by making big improvements to its online platforms, home delivery and mobile app.

Over the past year, customers redeemed more than 58 billion points through the MyMacca’s Rewards program with total digital sales making up about 40 per cent of system-wide sales.

“It continues to highlight the value that customers put towards convenience, their ability to engage on the MyMacca’s app,” said Martinez.

Global toy company Mattel has partnered with Retail Prodigy Group (RPG) to launch an online store in time for the Barbie movie launch.

Mattel’s portfolio includes Barbie, Hot Wheels, Thomas & Friends, Fisher-Price, American Girl, Uno, Masters of the Universe, Monster High and Mega.

RPG is an Australian retail franchise partner for global brands and since 2011 has worked with Nike to expand its footprint across Australia and New Zealand.

Paul Faulkner, MD of Mattel – Asia Pacific, said the brand is on a mission to create “innovative products and experiences” together with RPG.

“Our consumers are fans, looking to enjoy our brands in categories like apparel and homewares. Our new partnership with RPG lets us do just that.”

Stephen Younane, CEO of RPG, said the company is “dedicated to providing the best retail experiences” for its customers and is looking forward to bringing that same excellence to Mattel’s brand portfolio.

Productivity and focus are expected to be the next benefits that consumers want from food and beverage products, according to Mintel’s Global Food and Drink Trend ‘Staying Sharp’.

The company’s global consumer research shows that 55 per cent of consumers would like their diet to help strengthen the immune system, 40 per cent would like their diet to help maintain healthy brain function, and 26 per cent to improve their mood. 

Stephanie Mattucci, director of Mintel Food and Drink Research, said that interest in mood and cognitive benefits is modest but growing. 

“Brands have an opportunity to help consumers optimise their mental performance, but there is work to be done,’ said Mattucci.

“Consumers need encouragement to try these products, creating an opportunity for brands to get consumers excited about brain and mood health benefits.”

At IFT 2023 (Institute of Food Technologies), Mattucci suggested that natural caffeine and B vitamins, as ingredients that provide focus and clarity and support brain health, could be part of the next wave of functional food and drink launches to watch.

While coffee dominates as an ingredient for brain support – with 14 per cent of global F&B products launched in the last five years claimed to have brain/nervous system benefits – new sources of caffeine are emerging, such as guarana and yerba mate, positioned as ‘natural caffeine’.

Mattucci continued that while consumers value caffeine’s mental energy boost, they still have concerns about its overall health impact, creating opportunities for new caffeine sources that offer sustained energy with fewer side effects. 

“Brands that educate consumers about these less familiar sources of caffeine stand to benefit,” she added. 

Meanwhile, Mintel’s research indicates that B vitamins can be safer for consumers looking for additional energy and overall health benefits. B vitamins support metabolism and the body’s ability to produce energy, as well as support neurotransmitters, which play a key role in mood and mental health.

In the past five years, nearly half (45 per cent) of global food and drink launches with a brain/nervous system claim contained a B vitamin. Two in five (37 per cent) global food and drink launches with an energy functional claim contained a B vitamin.

Mattucci remarked that food and beverage brands looking to boost mental performance ingredients and benefits must “tap into the familiar” and need to reassure consumers about eating for their brain.

“Experimentation with novel brain-boosting ingredients will take time and trust,” she concluded.

“As consumers become familiar with this concept, they will turn to food and drink that can support cognition, manage stress levels, and optimise brain function. Brands have the opportunity to pair ingredients that can help consumers cope with stress with those that support mental clarity.”

Mintel is a market intelligence company providing detailed insights into consumer and business market sectors.

Online pet supplies company Pet Circle has secured $75 million in funding from its existing top-tier investor, Prysm Capital, coming after strong retail sales of $308.8 million last year.

The funding will help support Pet Circle’s growth as it continues to invest in expansion to potentially secure a larger share of the pet supplies market – worth $12 billion annually.

“Pet Circle continues to be an innovator in the pet industry, with an unwavering commitment to building an exceptional digital-first customer experience,” said Matt Roberts, co-founder and partner of Prysm Capital. 

“Under the leadership of [co-founder] Mike Frizell, they’ve emerged as a major player in a category that continues to see strong tailwinds globally.”

The $75 million investment will also allow the firm to maintain its unicorn value, which it acquired in its Series C round in December 2021.  With its expanded offering – which now includes more than 13,500 pet speciality products and insurance – the company aims to secure a larger share of the pet category.

“With a healthy cash balance and continued growth in our core consumables categories, particularly premium food, the outlook for Pet Circle is one of continued and rapid growth,” concluded Frizell. 

“This investment boost is yet more confidence from our investors of the opportunity ahead for Pet Circle as we build an exceptional customer experience.”

The investment in Pet Circle is subject to receipt of customary regulatory approvals.

Global beverage company Lion has acquired Australian craft spirit brand Four Pillars in a landmark deal.

The acquisition includes the ownership of the Healesville distillery and all domestic and international sales and marketing of the brand.

Lion CEO Sam Fischer said Lion is “thrilled” to add Four Pillars to its portfolio.

“Alongside continued investment behind our core beer business, we see premium spirits as a real opportunity for future growth.”

Four Pillars co-founders and chief distiller, Cameron Mackenzie and brand and strategy director, Matt Jones will remain in the business in their current capacities.

Mackenzie said Lion has played an “integral part” in expanding the brand across Australia and New Zealand.

“This is a great day for our brand, the business, our home in Healesville, our investors, families and staff. It does feel like it’s been a whirlwind 10 years, and this feels like the absolute right next step.”

Four Pillars’ co-founder and trade director, Stuart Gregor, will take an extended sabbatical but will remain with the business in the short term.

Four Pillars joins Lion’s owned Vanguard Luxury Brands distribution business and together will operate as a stand-alone spirits division within Lion Australia called Four Corners Global Spirits.

Embattled Bubs Australia has dumped its previous trade and distribution partners in China and will attempt to gain Beijing’s regulatory tick for its Melbourne manufacturing site as it seeks to assure shareholders it has the winning formula ahead of a motion to spill the board.

Bubs Australia announced the plans on Thursday as part of its strategic review, which newly installed chairperson Katrina Rathie launched after deposing founder Kristy Carr and former executive chairman Dennis Lin.

“Clearly our China strategy has failed,” said independent non-executive director Reg Weine in an online presentation of the strategic review to shareholders on Thursday morning.

The company did not have the right go-to-market plan, distribution partners, or the right pricing architecture, he said. “Our daigou business was overly reliant on rebates and discounts.”

Bubs Australia said it would appoint new distributors and trade partners and review its joint-venture agreements in China. In a statement to this masthead, a Bubs spokesperson said it had secured new trade partners and two new Australian daigou distributors but did not name them. Daigous are shoppers who buy and export premium goods to customers in China for a profit.

“We expect to onboard more partners as things settle down and we accelerate the reset,” the spokesperson said.

The company’s management also confirmed on Thursday that it would work to secure “state administration for market regulation” registration in China for its Deloraine manufacturing facility in Melbourne. Gaining this regulatory approval would give Bubs direct access to China’s general retail market, where the majority of infant formula is sold.

Bubs has abandoned plans under previous management for a joint venture to manufacture its products in China. The Heilongjiang joint venture is a key point of contention in a legal dispute between Carr and Lin, and the company. The company claims the then-CEO and chairman ignored instructions not to visit the factory site or open a bank account in relation it.

Responding to a shareholder question about Alibaba’s role in Bubs’ future distribution strategy, Weine said the business was very fortunate to have the support of “one of the most sophisticated e-commerce players in the world”.

“I think as a business we need to leverage that relationship much harder to our advantage,” he said. “But that is just one channel and one go-to-market open to us.”

Meanwhile, Weine described the US market as its “growth engine” and said the strategy was “going better than expected”. US sales are expected to double in the 2024 financial year.

The strategy for the US market that the board outlined for investors was similar to that outlined by ousted chief executive Kristy Carr and former executive chairman Dennis Lin, with the company highlighting that the US market was performing “better than expected”.

Other changes outlined in the review include a focus on streamlining food products to higher margins, consideration of co-manufacturing and private label products, and drumming up Bubs’ position as a “clear market leader” in the goat segment within infant formula.

“You can expect us to now focus on our competitive advantage and double down on all things goat,” Weine said.

The company is hoping the strategic review will convince shareholders to vote against spilling the current board at the coming extraordinary general meeting (EGM), initiated by a group of dissident investors led by Carr and Lin and backed by Chemist Warehouse chair Jack Gance.

Bubs Australia is operating without a chief executive officer since terminating Carr from her position. Weine said the board would announce a chief executive “shortly after the EGM”.

“The significant fall in shareholder value is ultimately why we are here, why the significant intervention was necessary, and why the governance at Bubs had to change,” said Weine.

“I think it’s fair to say there was a complete lack of focus and accountability.”

Bubs shares declined in morning trading but have since recovered, and were up more than 2 per cent in late afternoon trading.

Shareholders in the company will have to vote on July 27 on whether to keep Bubs’ board of directors, made up of Rathie, Weine, Jackie Lin and Paul Jensen, or to replace them with a new team including Peter Nathan as CEO, former Elders deputy chair James Jackson as chairman, and manufacturing expert Rupert Soar as a non-executive director.

In a statement by the Save Our Bubs dissident investor group, Jackson and Nathan said the strategic review was “light on detail” and that most elements were unchanged to the one implemented by Carr and Lin.

“There is sadly so little to show after three months of review and the engagement of expensive external advisors,” they said.

“There was no detail of the prospective business partners and distributors in its so-called China strategy, which looked remarkably similar to what was being pursued previously ...

“There was no strategy to capture direct trade [daigou], which accounts for 80 per cent of [instant milk formula] sales in China other than acknowledging getting [state administration for market regulation] approval for the Deloraine facility will be a long and costly process.”

Nathan and Jackson renewed their attack on the current board’s skill set and sought to cast doubt on their ability to secure regulatory approval from Beijing.

“Sadly the board lacks any experience, track record and insight to bring to bear in securing this ambition which is pivotal to the plan that was presented.”

McPherson’s has appointed Brett Charlton as its new MD and CEO, effective August 1. 

Charlton joins McPherson’s after serving as a strategic growth counsel to companies in the consumer products industry. He formerly served as chief skincare officer for Laser Clinics Australia and as MD for Sanofi Consumer Healthcare and Tip Top Ice Cream. 

Charlton has 25 years of marketing and branding experience, as well as manufacturing and supply chain knowledge, and a customer, consumer, digital, and data-first mindset. 

“Brett’s career highlights include significant turnaround experience, where he led both top and bottom-line growth in manufacturing and consumer-based organisations,” said McPherson’s chairman Ari Mervis. 

“His leadership acumen and proven track record for driving performance will greatly assist the company. The board is looking forward to working with Brett to deliver strong results for all stakeholders.”

Mervis will continue as executive chairman, and Alison Cook will serve as CEO until Charlton joins. After that, Mervis and Cook will resume their responsibilities as non-executive chairman and non-executive director, respectively.

Chemist Warehouse acquired a 10-per-cent stake in consumer products supplier McPherson’s last year as part of a larger strategic distribution collaboration between the two companies.  

ASX-listed winemaker Treasury Wines Estate (TWE) will close its Karadoc winery in northwest Victoria due to declining wine consumption and rising costs.

Established in 1973, the Karadoc winery makes wine for TWE brands including 19 Crimes, Lindeman’s, Wolf Blass and Yellowglen.

TWE chief supply officer Kerrin Petty said the decision was a “last resort” after the company looked at all other options.

“A number of factors contribute to our shifting vineyard footprint including changing consumer trends and wine preferences as well environmental changes such as higher temperatures and reduced access to water.

“This has meant divesting some of our vineyard assets but also looking at opportunities to expand our footprint in new locations for future growth.”

According to SMH, the closure would result in the loss of 60 jobs, however, the company said necessary assistance would be provided to help staff land roles in the local winemaking industry.

The winemaker will also divest its commercial vineyards in Lake Cullulleraine, Victoria and Yankabilly, NSW.

Following the closure mid-next year, the brand’s wine will be produced through TWE’s winemaking partners – Zilzie Wines and Qualia – and at TWE’s Barossa winery in South Australia.

In May, the winemaker said it was looking to sell off underperforming brands to cut costs and focus more on growing its higher-value and luxury portfolio.

Non-alcoholic spirits maker Lyre’s has completed its latest “strategic” funding round, raising nearly $34.5 million led by investors DSquared and Morgan Creek Consumer Fund and its existing shareholders.

Founded in 2019, Lyre’s Non-Alcoholic Spirits is a range of 18 alcohol-free classic spirits, eight ready-to-drink cocktails and non-alcoholic sparkling wine.

Experiencing “extraordinary” year-on-year growth, Lyre’s said the investment would help expand its global supply footprint and “drive momentum” in key markets such as Australia, Europe, North America and the Middle East.

The company claims to sell one bottle every 30 seconds in more than 60 countries across different channels.

Kristy Bloomfield, senior VP at Lyre’s, said the company is delivering programs and tactics to introduce the non-alcoholic category to a wider audience. 

“It is an exciting time for the brand as more and more people choose Lyre’s, as reflected in our exceptional growth,” said Bloomfield. 

“Consumers across ANZ can now enjoy a Lyre’s in 5000+ venues including Qantas Lounges, Accor Hotels, all major retailers, and the leading restaurants across ANZ.”

Following the seed funding round, Lyre’s appointed former chief marketing officer Paul Gloster as its new CEO, taking over from founder Mark Livings.  

“Our new expanded leadership structure ensures accountability across all our strategic priorities and business functions,” said Gloster. 

“I am excited to work with such a capable and passionate team that is energised and ready to lead the business into our next exciting stage.”

Gloster joined Lyre’s since its establishment in 2019, overseeing growth for the company in the US. The company said he was key to delivering the company’s “outstanding growth”, brand health, and equity position.

He also previously worked for Coca-Cola Amatil in Australia and Pacific Beverages.

Discount supermarket Aldi has its sights set on city dwellers and commuters, with the retailer’s convenience-focused “Corner Store” format gaining traction as households seek out solutions to surging grocery prices.

Aldi opened its newest small-format store – which is two-thirds the size of a typical shopfront and features fancy baked goods, sushi and ready-to-go meals – in the Sydney suburb of Newtown on Saturday.

The retailer’s director of customer interactions, Adrian Christie, said the different store format was key to Aldi catering to city shoppers.

“We want to bring that [affordable offer] to someone who may have been used to paying premium prices in inner-city locations – in some of those locations, the costs are more significant than outer suburbs,” he said.

“We want to bring that value to customers – it doesn’t matter where they live.”

Aldi first trialled the smaller store format in Sydney in 2021, and now has seven sites – three in Melbourne and four in Sydney. Its focus on fresh-baked bread and fancy cheese may elicit a more boutique supermarket feel than the typical suburban Aldi, but the value pitch to shoppers is still the same.

“When you get to the till, you realise it’s still Aldi prices,” Christie said.

The German grocery giant entered the Australian market in 2001, and surging grocery costs and rising interest rates have boosted the relevance of the discount retailer’s low-cost pitch over the past year. Food inflation was tracking at 7.9 per cent in the 12 months to May.

The Australian grocery market is dominated by Woolworths, which holds a market share of just over 37 per cent, and Coles, which holds close to 27 per cent of the market, according to data platform Statista. Aldi is the third-largest player in the country, holding around 9.5 per cent of the market, while IGA operator Metcash commands close to 7 per cent.

Coles and Woolworths have also been facing price inflation across their businesses over the past 12 months, with both brands acknowledging surging demand for their private label products as consumers try to make their dollars stretch further.

Analysis from UBS suggests that food inflation based on Coles and Woolworths online prices averaged 8.9 per cent in May.

Retail analysts have tipped Aldi to benefit over the next year as consumers rein in their spending.

Analysts at Jarden said in a note last month that based on industry analysis, Aldi’s sales growth will be in the teens over the next 12 months, while the broader grocery market grows between 5 and 8 per cent.

“The rising focus on value, increases in cross-shopping and general focus on value are seeing Aldi growth re-accelerate, with share of footfall up steadily,” its analysts said in a note to clients in May.

Christie said many shoppers were coming to Aldi for the first time as they contend with rising costs. He said that while consumers often headed in-store for one particular product, they tended to expand their baskets over time.

“They might come in for meat, and it might take them a month, or two months, but they start exploring different parts of the range.”