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The $5 billion Chemist Warehouse chain is looking to expand further into the booming heath sector after backing the launch of a new vitamin company being fronted by six-times world champion surfer Stephanie Gilmore.

Gilmore has become the brand ambassador of The Natural Vitamin Company, co-founded by Melbourne entrepreneur Sam Schachna, who previously ran one of the nation’s biggest privately owned food marketing and distribution businesses, Menora Foods.

Menora, which distributed brands such as Peckish rice snacks, Cobram Estate olive oil, Wattle Valley cheeses and dips, and Maille mustard, was sold in March 2015 to Filipino food powerhouse Monde Nissin Corporation.

Mr Schachna has since established his own organics food company known as Simple Foods, whose brands include Tribe Organics and Pana Chocolate, and he has now launched The Natural Vitamin Company with the support of Chemist Warehouse co-founder and chairman Jack Gance.

Its products are sold exclusively in-store and online at Chemist Warehouse, the largest retailer of vitamins in Australia.

Chemist Warehouse sells almost $1bn worth of vitamins each year and exports $300 million worth of vitamins to China.

“We were approached by Sam and his team … I immediately saw the benefits of having a product that is different to what we have on our shelves and does appeal to those who want a natural product with the same effects as the chemical product,’’ Mr Gance told The Australian.

Many of the vitamins currently available in the Australian market have been made from synthetic materials and have gone through chemical processing.

“It (the organic product) is slightly more expensive but we have worked on the price and we have it at a more affordable level. It is truly a unique and different product range so we were happy to slot it in. We get approached by people all the time wanting to put ranges in but we generally don’t have the room and we have to make the room.”

Mr Gance, who was ranked at 93 on this year’s Rich List with a wealth of $813m, said the initial success of the Natural Vitamin Company product — which has been on shelves for two weeks — was “pretty good”.

“It has been above expectations and above budget so we are very happy with it. The good thing about it is that people have a pleasant, positive attitude towards it and say ‘Hey, this is something that we should have had some time ago.’,” he said.

“A lot of people have pseudo organic and natural products where they are pretend. We went through and checked this out and this is really, truly natural all the way through.”

“We would hope to be able to expand the range, depending upon its success, into different areas as well. There are some areas where you can’t get natural but where you can, I think we should look at it.”

Sam Schachna, executive director of The Natural Vitamin Company, said the company’s mantra was “from the garden, not the lab” and that its vitamins were made from organic fruit and vegetables such as organic kale, organic holy basil extract and organic lemon peel extract.

He said the company was now looking to move into children’s vitamin products.

“Our next line of innovation that we are working closely with Chemist Warehouse is around kids. It will be a children’s range,” he said.

“We are also looking at other formats as well. Tablets are not necessarily for everyone. We are going into powders. With our proprietary blend, if we are able to put it into a variety of products as an ingredient, that gives us other applications.”

He said Mr Gance had been “an absolute mentor to our team and it is thanks to him and Chemist Warehouse that The Natural Vitamin Co exists.”

German supermarket chain Kaufland’s most high-profile local corporate draftee, former Woolworths and Metcash executive Mark Hewlett, has returned after six months’ training in Germany to take up a leadership role as director of supply chain, logistics and sales.

The move comes as Kaufland plans its range of private label groceries. Early indications suggest the discounter will make a big push into the fast-growing health food category as it attempts to lure shoppers suffering from lactose and gluten intolerance as well those interested in buying natural or organic foods.

Kaufland, a subsidiary of the Schwarz Group, the world’s fourth-largest retailer, is considering launching a portfolio of private label health brands under the K Organic, K Free and K Favourites brands at its soon-to-be opened Australian supermarkets. K To Go is another private label brand Kaufland is considering for the convenience category.

K Free is Kaufland’s lactose and gluten-free range, a category Woolworths, Coles and Aldi are widening. This month Aldi, whose aggressive store rollout has seen it grab an 11 per cent stake of the $90 billion grocery sector, launched its first organics month to showcase its private label range.

The organics category is estimated to be worth $2.4bn and sales are growing at a much faster rate than mainstream groceries. If Kaufland leads with a strong and cheap range of organics and lactose and gluten-free foods, it could trigger a new price war with the supermarket heavyweights.

Mr Hewlett was an executive general manager at grocery wholesaler Metcash. His roles at Woolworths included national head of operations for the petrol and convenience store business and executive in charge of Thomas Dux, the company’s gourmet and premium grocery chain.

Mr Hewlett has joined the Kaufland Australia board alongside Maximilian Wiedmann, boss of Kaufland’s South Australian and Victorian operations.

Julia Kern, 28, was appointed new country manager for Kaufland Australia earlier this year. Also on her team is Male Nousch, a former strategy director at British supermarket chain Tesco and previously an associate at consultancy McKinsey.

When TPG Capital and The Carlyle Group offered $6.75 a share for Greencross in early 2016 the pet care retailer gave them short shrift, saying the $770 million offer "fundamentally undervalued" the company.

Rather than slinking off with their tails between the legs, TPG and Carlyle Group sold off most of their 15 per cent stake at $7.30 a share, 26 per cent more than their average entry price of $5.79.

Two and half years later, the acquisitive TPG has come back for a second bite and is one of several parties believed to have approached Australia's largest integrated pet and vet care company.

Greencross shares surged almost 18 per cent to a five-month high of $4.89 on Wednesday after the company confirmed a report in The Australian Financial Review's Street Talk column that buyers, believed to be TPG and BGH Capital, were circling.

Greencross shares surged almost 18 per cent after the company confirmed report that private equity buyers were circling.
Greencross shares surged almost 18 per cent after the company confirmed report that private equity buyers were circling.
Greencross confirmed it had received "credible" but conditional and non-binding and incomplete offers and was engaging with a number of parties.

"The proposals are required to be kept confidential, and there is no certainty that any proposal will result in a transaction involving Greencross, what the terms of any such offer would be, or whether there will be a recommendation by the board of Greencross," the company said.

TPG and BGH are thought to be considering offers pitched around $5.30 a share, a 30 per cent premium to Greencross' average share price over the past few months. This would value the company at $636 million and would represent a multiple of about 15 times forward earnings per share.

UBS is believed to be advising TPG and Macquarie Capital and Allier Capital are advising Greencross.

The private equity interest appears to have come as a surprise to short sellers, even though Greencross has long been rumoured a takeover target. Greencross is the 10th most shorted stock on the ASX, according to shortman.com.au, with 10.3 per cent of its shares sold short.

The approaches follow a tumultuous year for Greencross, which owns about 250 stores under the Petbarn, City Farmers and Animates banners and is the biggest employer of vets in Australia, operating more than 190 vet clinics.

Three months after taking the helm from former chief executive Martin Nicholas, former Qantas executive Simon Hickey downgraded profit guidance by about 9 per cent in May after conducting a strategic review, sending Greencross shares plunging 22 per cent.

The strategic review brought to the surface concerns about the group's long-term growth prospects, market share losses and the strength of its balance sheet.

Mr Hickey, the former Qantas Frequent Flyers and Qantas International CEO, is aiming to cut costs by between $10 million and $13 million a year, or about 5 per cent, and reinvest in technology, data analytics and e-commerce to improve customer engagement and enable Greencross to compete with Amazon.

However, Amazon is moving fast, adding a comprehensive first-party pet care offer to its Australian site last month.

Citigroup analyst Sam Teeger highlighted the potential for takeover activity in reports in June and August, saying: "While we do not rule out another PE bid, especially given the share price weakness, conditions have become more challenging since the last bid."

Greencross executives declined to comment.

Soft drink and chip giant PepsiCo has achieved something exceptionally rare in corporate Australia without even trying too hard: a senior leadership team that is majority female.

Amid a debate about the merits of gender quotas that stretches from boardrooms to the upper echelons of major political parties, the company's boss says his team reached C-suite gender equality by being open-minded enough to choose "the right people for the roles".

"We have given ourselves a number [to target] which is 50:50, just to keep us honest and keep us in the game," Pepsico Australia and New Zealand chief executive Danny Celoni said.

"We were clear that we wanted more senior leaders and females in roles, but just as we worked through the process ... the right person for the roles just happened to be females."

Two recent appointments - Louise Baker as senior sales director, and Dulcie de Koning as commercial strategy director - brought the number of women on Pespsico's leadership team to seven, along with five men.

"We’re pretty proud we ended up in that place even though it was just by default, by doing the right thing for the roles," Mr Celoni said.

Women occupy just one out of every five executive leadership positions in ASX200 companies, according to a report released last month by the group Chief Executive Women.

Like its rival Coke, Pepsico is contending with a consumer shift away from sugar.
Like its rival Coke, Pepsico is contending with a consumer shift away from sugar. CREDIT:AP
Only one of Australia's 200 largest listed companies has a higher proportion of women in its executive team than Pepsico - Estia Health, which has six women out of nine positions.

The Chief Executive Women study found that only 22 companies on the ASX200 had what it says is the "optimal" representation of between 40 and 60 per cent women, while 23 companies had no women in their executive teams at all.

Mr Celoni said having the target of a 50:50 gender balanced team kept the issue front of mind when advertising and recruiting for new roles.

“We do really go in with an open slate from our mindset," he said.

“It’s important to create a team that’s not exactly the same, it’s important to create a team with different views, different perspectives different backgrounds, having worked in different geographic areas to bring that pollination thinking into the marketplace."

There were 14 female CEOs leading ASX200 companies, up from 11 a year ago, and 24 chief financial officers compared to 17 a year ago, according to Chief Executive Women.

Like rival Coca-Cola Amatil, Pepsico is contending with a consumer shift away from its traditionally high-sugar products, while there are continued calls for Australia to follow the UK and several other nations by implementing a sugar tax.

Mr Celoni said about 60 per cent of its beverage sales were now of sugar-free products, led by Pepsi Max, having deliberately focused its marketing and product development to get " ahead of the curve" of consumer's preference for healthier products.

Pepsico's snack business, which includes Smiths Chips and Doritos, was growing at about 3.5 per cent annually, Mr Celoni said, supported by product innovation like Doritos biscuits and the locally produced Red Rock Deli brand, which had now been exported back to the US.

“Australia’s being used as an innovation hub”, he said, which was also helping make its products "indispensable" to consumers and protecting its supermarket shelf real estate against a tide of home-brand products.

Pepsico would not comment on how its overall business was trading in Australia. But the Nasdaq-listed group company reported "high single-digit organic revenue growth" in Australia in the most recent quarter.

Woolies drought relief milk wideSupermarket giant Woolworths has already raised $500,000 for drought relief since it introduced a levy on its three litre milk in Queensland, New South Wales, ACT and Victoria on September 20, ahead of the arrival of its limited edition drought relief range this week.

From this week, customers in these four states will have the option to purchase a drought relief version of the store’s own brand Full Cream and Lite Milk varieties at $2.20 for two litres and $3.30 for three litres, with the extra 10 cents per litre going to dairy farmers that are struggling.

Woolworths director of Fresh Food Paul Harker said it’s “pleasing” to see customers get behind the initiative.

“With the introduction of a two litre variety and our drought relief labelling, we’re making it easier for more of our customers to support the effort if they have the means to do so,” Harker said.

“We’ve sent our first drought relief payment to Parmalat and will be working closely with them to ensure relief starts to flow through to drought-stricken dairy farmers as quickly as possible,” he added.

Parmalat will distribute monthly payments to more than 220 dairy farmers in New South Wales and Queensland with the independent oversight of its Drought Relief Committee from October 15. The committee includes Premium Milk Limited chairman Peter Jervis, Dairy Connect CEO Shaughn Morgan, Parmalat general manager – Supply Chain Vince Houlihan and an independent auditor from KPMG.

Funds will be based on the volume of milk they provide to Parmalat, with a minimum safety net of $1,000 per month for smaller farmers. Harker said that this effort “won’t fix the structural issues in the dairy industry” and noted that the Federal Government is pursuing reforms proposed by the ACCC.

“This effort is about providing much needed relief from the devastating effects of drought, while government and industry work through the reforms needed to sustain the sector longer term,” Harker said.

Woolworths will continue to provide 2L Full Cream and Woolworths 2L Lite Milk for customers at $2.

Interbrand has unveiled the Best Global Brands in 2018 with Amazon, Spotify, and Netflix taking top spots, and FMCG brands featuring heavily in the top 100.

Soft drinks giant Coca-Cola took the 5th spot while L’Oréal, Nestle, Corona, Heineken, Kellogg’s, Pampers were among the others recognised for their brand value.

“A decade after the global financial crisis, the brands that are growing fastest today are those that intuitively understand their customers and make brave, iconic moves that delight and deliver in new ways,” said Charles Trevail global chief executive officer, Interbrand.

“When looking at our Best Global Brands data over the last 10 years, it’s clear that Role of Brand is more important and valuable than ever, and has continued to help leading organizations accelerate growth, even at a time when an overall sense of trust in institutions has been in steep decline. We live in a world where consumers have more power than ever, curating their own personal brands like we’ve never seen before.”

Makeup giant L’Oréal has upped its digital innovations which has transformed customers relationships with the brand. The ModiFace app, which was acquired by the cosmetics business, allows customers to experience a live, step-by-step tutorial with a makeup advisor to virtually try on personalized makeup looks and shop online.

Retail giant Amazon has ventured into the supermarket sector with healthy grocery, Whole Foods. Customers can now purchase sustainably-sourced groceries from Whole Foods through Amazon Prime and even have them delivered straight to their door.

Interbrand said in a statement that there is a significant difference between customer-first and customer-centric. Being truly customer-centric today means going more in depth by offering a product or service that the shopper wants. Brands should be able to truly know how customers think, feel and behave so they can deliver an ultimate experience.

It further said that companies should anticipate emerging customer needs and evolve their business and brand at a speed to adapt to the changing retail and FMCG landscape. The company recognised that leading brands are now collaborating with their customers to put out solutions which brings on board the voice of consumers in every aspect of their businesses.

“Change is imperative, and making bold moves is critical to long-term success. But, it can’t be anarchy. The whole company cannot simply innovate and change now to meet the short term expectations of customers. There has to be a vision which galvanizes the organization and gives it the confidence to make the right choices to transform. After all, that is what a strong brand does: empowers you to activate brave,” said Interbrand.

FMCG global brands such as Budweiser, Hennessy, Johnson & Johnson, Jack Daniels, Johnnie Walker and Shell also made the top 100 list this year.

Top 10 most valuable brands 2018

Apple
Google
Amazon
Microsoft
Coca-Cola
Samsung
Toyota
Mercedes-Benz
Facebook
McDonald’s

Margaret River has again shown it can produce world-class wines not limited to its traditional varieties of cabernet and chardonnay at the 2018 Wine Show of WA.

And German retailer Aldi also proved its previous honours on the national wine show circuit were no flash-in-the-pan wins.

Local winery Stella Bella won best wine of show at WA's most prestigious wine show for its 2017 Shiraz, the $32 wine judged best from a field of nearly 850 that were tasted at the show in Mount Barker.

And Aldi claimed best white wine and best chardonnay of show for its $15 2017 Blackstone Paddock Limited Release Chardonnay, a remarkable feat given this year's judges praised the high standard of the 2017 chardonnay class.

Wine judge Lim Hwee Peng was in town for the 2018 Wine Show of WA.
Wine judge Lim Hwee Peng was in town for the 2018 Wine Show of WA.
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The most successful exhibitor at the show for the throng of experienced local, national and international judges was Cherubino Wines, which recently opened its new cellar door on Caves Road in Margaret River.

The judging panel said the standout class this year was the 2017 chardonnay class, with 108 entries that garnered eight gold medals, while the 2018 rieslings also impressed with six golds from the field of 44 wines.

The 41st edition of the annual wine show drew 834 entries from 115 producers among all nine of WA's wine regions, with 592 medals awarded (340 bronze, 166 silver and 86 gold).

Celebrated Singaporean wine judge Lim Hwee Peng joined new chief judge of show, Tasmanian winemaker Samantha Connew, who said the judging illustrated the strength of WA wines on the national circuit, particularly in the riesling class.

Margaret River winery Stella Bella won best wine of show for its 2017 Shiraz.
Margaret River winery Stella Bella won best wine of show for its 2017 Shiraz.
"These wines show a breadth of different styles, from classic linear purity to funkier, slightly worked wines," she said.

"While we expect both chardonnay and cabernet to be world class in this show (and they undoubtedly were), other varieties and styles put in a strong showing.

“Malbec impressed both as a straight varietal and as part of blends, showing the regional promise of this variety for the future.

“Some lovely 2017 shiraz demonstrated real purity of fruit with deft winemaking guiding the way in terms of vibrant, medium-bodied wines with judicious use of oak and stems.

“The 2017 chardonnays were a very strong field as always and with the cooler vintage showing through in tighter, more coiled wines, these will provide good drinking for some time to come.

"Finally, it was pleasing and very apt to be able to award the Gladstone’s Trophy to a fortified, a nice nod to the Swan Valley and its historical contribution to the WA wine industry."

A recent WAtoday taste test of Aldi's wine offerings on the eve of selling liquor in WA for the first time proved the wines were nothing to sneer at and the German retailer had established a solid wine buying program .

Aldi recently won two trophies at the 2018 Riverina Wine Show and in the past 12 months has won gold for the following wines:

• Veuve Olivier Brut NV - $7.99
• Kaiora Bay Marlborough Sauvignon Blanc 2017 and 2018 vintages ($8.99)
• Kaiora Bay Reserve Marlborough Sauvignon Blanc 2017 ($11.99)
• Reserve Les Maurins Sauvignon Blanc 2017 ($11.99) (3rd year in a row) (Seasonal)
• A.C. Byrne Margaret River Chardonnay 2017 ($9.99)
• Claire Creek Merlot 2017 ($5.99)
• The Pond Cabernet Sauvignon 2017 ($6.99)
• 5171 McLaren Vale Cabernet Sauvignon 2016 ($11.99)
• Chateau Les Maurins Bordeaux 2016 ($9.99)
• El Toro Macho Superior 2016 ($4.99)
• El Toro Macho Reserva 2014 ($6.99)
• Coraggioso Nero D’Avola 2017 ($4.99)
• Chateau La Diffre Plan De Dieu (Cote Du Rhone Villages) 2016 ($9.99) (Seasonal)
• Pajaro De Buen Aguero Ganarcha 2016 ($9.99) (Special Buy)
• Taylors Special Release Clare Valley 2016 ($14.99)

Aldi Australia buying director Jason Bowyer said recognition from judges in WA and interstate was extremely pleasing.

"Winning four trophies this year in a highly competitive show circuit is testament to the genuine quality of our wines," he said.

"Our team of suppliers and winemakers both domestic and abroad have achieved outstanding results.

To win golds across price points from as low as $4.99 through to our premium wines, shows that we committed genuinely to value at every price point.

This is rarely seen in any other retailer domestically and internationally."

WA Wine Show panel leaders included Courtney Treacher from Brookland Valley Wines, Kim Horton from Willow Bridge and winemaker Peter Bissell from Balnaves of Coonawarra.

2018 Wine Show of WA : Trophy Winners
Best Wine of Show
Stella Bella 2017 Shiraz

Best Red Wine of Show
Stella Bella 2017 Shiraz

Best White Wine of Show
Blackstone Paddock 2017 Limited Release Chardonnay

Most Successful Exhibitor Overall
Cherubino Wines

Most Successful Exhibitor (under 250 tonnes)
Castle Rock Estate

Winery with the Highest Aggregate for top 3 pointed wines
Houghton and Xanadu (equal winners)

Best and Most Distinctive Regional Character
Houghton NV Cellar Reserve Rare Liqueur

Best Great Southern White
Castle Rock 2018 Porongurup Riesling

Best Great Southern Red
Ferngrove 2017 Black Label Malbec

Best Chardonnay
Blackstone Paddock 2017 Limited Release Chardonnay

Best Riesling
Castle Rock 2018 Porongurup Riesling

Best Aged Riesling
Alkoomi Wines 2010 Black Label Riesling

Best Sauvignon Blanc
Franklin Tate Estates 2018 Alexanders Reserve Sauvignon Blanc

Best White Blend
Deep Woods Estate 2018 Ivory Semillon, Sauvignon Blanc

Best Dry White Varietal
Juniper 2017 Small Batch Fiano

Best Rose of Show
Rockcliffe Winery 2018 Third Reef Rose

Best Pinot Noir
Castle Rock 2017 Porongurup Pinot Noir

Best Shiraz
Stella Bella 2017 Shiraz

Best Cabernet Sauvignon
Xanadu 2014 Cabernet Sauvignon

Best Red Blend
Ironcloud Wines 2017 Rock of Solitude Purple Patch GSM

Best Other Red Varietal
Ferngrove 2017 Black Label Malbec

Best Older Red Wine
Xanadu 2014 Cabernet Sauvignon

Best Sparkling
Pemberley NV Sparkling Lustre Chardonnay, Pinot Noir

Best Fortified or Sweet Wine
Houghton NV Cellar Reserve Rare Liqueur

Wesfarmers is looking to explore new investment opportunities and better leverage its existing data and digital opportunities, if shareholders approve its proposed demerger of supermarket subsidiary Coles on November 15.

In a series of documents released to the ASX on Friday, October 5, Wesfarmers said that the move to spin off Coles into a separately listed entity will enable it to invest in businesses with higher future earnings prospects.

Coles contributed just 35 per cent of Wesfarmers’ earnings in the 2018 financial year, despite accounting for 64 per cent of the conglomerate’s employed capital.

The group said its strong balance sheet and cash generative assets will create new investment opportunities post-demerger, while Coles is expected to benefit from Australia’s population growth and improving disposable income and consumer sentiment metrics moving forward.

Coles currently holds 31 per cent of the Australian supermarket sector. Rival Woolworths holds 38 per cent and German up-and-comer Aldi holds 10 per cent.

The supermarket revealed plans to improve the supply chain with two automated distribution centres over the next five years and continue rolling out consumer-centric initiatives in each of its divisions, including supermarkets, liquor, convenience and loyalty.

Coles is partnering with logistics solutions provider Witron on the automated distribution centres, which are expected to reduce costs and increase productivity over the medium to long term. The project is expected to cost between $600 and $800 million in capital expenditure.

Wesfarmers in August reported full-year earnings before interest and tax (EBIT) of around $4 billion. On Friday, it revealed that without the Coles business, the group’s EBIT would have been around $3 billion, while Coles’ EBIT would have been around $1.4 billion.

Wesfarmers shareholders will vote on whether to go ahead with the demerger on November 15. If the plan is approved, Coles will list on the ASX the following week.

With hindsight, Rob Scott's decision to bring Steve Cain back into the fold as chief executive of Coles was always going to create a few little timing issues heading into Wesfarmers' demerger of the supermarket business.

Cain officially started with the group in September, and made his first public appearance as Coles boss with Scott last Friday when Wesfarmers' released the documents underpinning the Coles spin-off.

Cain previously ran Coles for 14 months between 2003 and 2005. But most importantly, he worked with Wesfarmers on its acquisition of Coles in 2007. Scott announced Cain's appointment and the retirement of current Coles boss John Durkan in March, when it first announced the demerger.

But at the time Cain was running Metcash's $10 billion supermarkets and convenience business, so Scott's decision came with two costs.

First, as the demerger documents showed, Coles had to pay Cain a $3.9 million cash sign-on bonus as compensation for lost bonuses at Metcash.

Second, his employment conditions at Metcash meant Wesfarmers had to wait until it was well into the demerger process until Cain officially got his feet under the desk. This meant, for example that Cain wasn't involved in the preparation of Coles' five-year strategic plan, which was delivered in June.

On Friday, Cain committed to the broad thrust of that plan – particularly the focus on growing fresh food sales, and the move towards everyday low prices, with fewer and deeper discounts – but also left room for smaller changes.

"I'll get into the detail of it all and look at each individual component – but it will be about how fast we can execute it and how well we can execute it," Cain told investors.

Any strategic shifts, he said, would be detailed when Coles presents its half year results, likely in February.

Wesfarmers chief executive Rob Scott says investors don't need to fear the prospect of Cain making major strategic changes just months after Coles lists in late November.

"Part of the reason for selecting Steven as CEO is he's obviously very experienced, but he also sees things in a similar way to us around strategy," Scott told Chanticleer on Sunday, on the eve of an investor roadshow that will naturally have a big emphasis on the Coles deal.

Scott expects any strategic tweaks to be at the margin, and will be focused on faster execution of the existing plan.

More important for Scott is that any changes Cain needs to make will occur against the backdrop of improving sales and earnings at Coles. Same-store food and liquor sales grew in the June quarter at the strongest pace in two years, rising 1.9 per cent (adjusted for Easter), helping to boost June-half earnings 3 per cent after a 14 per cent fall in first-half profits.

Coles' highly successful Little Shop promotion has likely provided a further boost; Coles will hand down its September quarter sales numbers on October 15.

"The positive for Steven is he's coming into a business with positive momentum," Scott says. "I have no doubt he will put his own touches and stamps on the businesses."

BAML analyst David Errington was critical of the incentive structure for Cain detailed inside the demerger documents – or rather, not detailed, given Errington felt the disclosure was light on.

Errington also didn't like the fact short-term incentives are 100 per cent cash, as was the sign-on bonus.

Again, Scott urges investors to look at context and timing.

"The incentive arrangements for this for Steven are very much focused on what is a transitionary year."

For example, Scott says the bonus scheme for the next 12 months needed to reflect the fact Cain joined Coles part-way through the new financial year, when budgets had been set.

He says the Coles board will need to review this pay structure once the demerger is completed.

Investors will no doubt be watching closely, and will expect a better level of detail once Coles is on its own.

The new boss of Coles, supermarket veteran Steven Cain, will make his mark in the nation’s $90 billion grocery sector by driving one of the biggest shake-ups of Coles in more than a decade. It will see him kick out under­performing brands, narrow the range of brands within categories and fill the shelves with more private label goods.

Unveiling his five-year plan to the market yesterday, Mr Cain showed some of the steely determination and ruthlessness that have characterised his decades-long journey through the Australian and British retail sectors, as he confidently declared Coles would maintain its competitive edge by squeezing prices further.

Also under the gun would be brands that either failed to inspire shoppers or were merely mirroring what was already on offer — something Mr Cain said he had witnessed over his many years in the sector.
There is clearly more of an opportunity in the grocery space to differentiate and simplify ... but the way certainly I have seen these thing work in other places is that the big brands tend to get bigger, and brands that are just duplicating ... get smaller,’’ Mr Cain warned.

And Mr Cain showed he was a man in a hurry, as was his hallmark when tried to rescue a then failing Coles food arm back in 2003, before he was ejected from the business.

He has now returned with a much more powerful mandate from parent company Wesfarmers and a newly formed Coles board to drive through his changes at a rapid pace.

“The focus for me is getting on at it and as fast as we possibly can because that is a competitive advantage,’’ Mr Cain said.

“It will be about how fast we can execute it, how well we can execute it.’’

He has pledged that Coles will cut deeper on prices to put more grocery products on everyday low pricing while pulling back on heavily discounted promotions, and he believes private label, or supermarket-owned brands, should increasingly take shelf space.

Mr Cain could be about to start a war on two fronts when Coles emerges as a stand-alone ASX-listed company on November 21.

Stripping out some grocery brands could infuriate suppliers, while lower shelf prices could trigger a new price war with Woolworths.

During his maiden press conference and briefing with analysts Mr Cain fleshed out his five-year plan for Coles, after details of the $20bn demerger from Wesfarmers were released late on Friday.

“Obviously we will maintain our relative competitiveness in the market — that is not something that anyone wants to lose, the good work that has been done,’’ Mr Cain said. “Going forward, as we have said, more everyday low pricing, more own brand and fewer, deeper promotions is, we believe, the way forward.

“We will remain competitive on price and make sure that at Coles you are getting very good value.

“When I look at the five-year plan, that plan is to be better value in five years’ time than we are today.’’

Mr Cain, who has spent the past few weeks in the role touring supermarkets, said shoppers would notice changes to the stores under his watch and the curating of individual stores’ ranges to better serve local, ethnic communities, as well as improving its health food categories.

But the new boss of Australia’s second-biggest supermarket chain seems to have private label and the duplication of products high on his agenda.

“I’ll certainly have a watchful eye on simplification and removing duplication, but equally we know we have to do more on unique own brand products (private label) and we have got to do a better job for matching the stores for the local customer base.’’

Mr Cain wouldn’t nominate a target for private label penetration in Coles stores but said in some grocery categories there would be greater own-brand selection and fewer outside brands.

“In broad terms I would expect to see more small brands, smaller innovative brands in the store.

“I’d expect to see the removal of some duplication in some categories, particularly those in decline, and I’d expect to see more innovation in own-brand products around exclusive lines.’’

Mr Cain wouldn’t say which categories were “in decline’’.

However, there would be new brands, and not just private label, with suppliers able to benefit from this, he argued.

“The key to success will be around innovation and bringing new things to customers. By the way there will also be lots of new brands coming in, not just own brand and around that sort of ethnic and health space.

“The good news for suppliers is that the business is growing.

“I think it has had 43 consecutive quarters of growth. When we are growing it means the supplier base is growing.’’

Details released by Wesfarmers to the market yesterday showed Coles Liquor had sales of $3.3bn in 2018 and pre-tax earnings of $130m, while its convenience stores had sales of $5.8bn and pre-tax earnings of $133m.

But the once-struggling liquor arm of Coles, which includes its Vintage Cellars and Liquorland banners, has begun to turn around.

The Coles demerger scheme booklet shows that its liquor business on a pro-forma basis had pre-tax earnings of $100m in fiscal 2016, rising to $138m in 2017 and slipping to $130m in 2018.

However, Coles convenience stores reporting earnings of $190m in 2016, and the same in 2017, falling to $133m in fiscal 2018.

Coles has also shown to be holding $1bn of freehold property on its books.

ELI GREENBLATSENIOR BUSINESS REPORTER
Eli Greenblat has written for The Age, Sydney Morning Herald and Australian Financial Review covering a range of sectors across the economy and stockmarket. He has covered corporate rounds such as telecommunica... Read more