News

Krispy Kreme ANZ has appointed Nicola Steele, who has been with the company since she was 19, as its new CEO, effective immediately.

Steele has worked with Krispy Kreme since 2006, rising through the ranks from crew member to store manager and area manager. She left university in 2011 and returned to Krispy Kreme as a state manager before progressing to senior leadership positions including national operations manager and head of retail & development, where she was instrumental in the brand’s expansion into Western Australia and New Zealand. 

Steele increased Krispy Kreme’s ANZ retail footprint over the next eight years before being appointed to COO in March last year.

“My focus is to broaden the horizons of career pathways for our employees,” she said. 

“I want to be able to offer all team members development and career opportunities that were afforded to me.” 

With the new role, Steele is in charge of the brand’s expansion, including concentrating on regional growth, establishing convenience partnerships, as well as investing in e-commerce and digital platforms.

Unilever has hired Morgan Stanley and Evercore to sell a portfolio of non-core beauty and personal care brands as the company struggles with the impact of inflation.

The portfolio includes Q-Tips, Impulse, Caress, TIGI, Timotei, Monsavon, St Ives, Zwitsal, Ponds, Brut, Moussel, Alberto Balsam and Matey.

Two years ago, Unilever hired Credit Suisse to divest Elida Beauty portfolio but later scrapped its plan as other companies cherry-picked brands from the portfolio and did not satisfy the multinational FMCG company’s expectations.

Now the plan has been revived under the leadership of new CEO Hein Schumacher, who focuses on streamlining the business due to inflation, Reuters said in an exclusive report.

The report noted that Elida Beauty booked revenue of about $760 million in FY22, according to sources of the newswire.

Morgan Stanley and Evercore have already reached out to potential buyers to measure interest for the portfolio, which could be a multibillion-dollar deal, the sources said.

Nespresso’s famous pods, first developed in 1988, are manufactured in Switzerland and then shipped to 81 countries around the world. But when it comes to brewing fresh ideas and new technology, the maestros of capsule coffee often take their cues from Down Under.

“We bring innovation from the market to the head office because they realise and recognise that a lot of trends start here in Australia,” says Nespresso Oceania managing director Stefan Vermeulen.

He points to a framed visual of the Creatista machine, which along with the Vertuo machine was conceived in Australia, a top 10 revenue-driving market for Nespresso. “This is one of our best-selling machines across the world.”

Vermeulen has recently relocated to Sydney to step into his new role as head of the company’s Australia and New Zealand markets. A Belgian national, the managing director started with Nestle-owned brand in 2011 as an account manager and then climbed the ranks to do a 4.5 year stint as the head of Nespresso Professional Australia, the corporate office, food service and hospitality arm of the business, before leading NZ operations for 3.5 years.

As regional managing director, Vermeulen will focus on defending Nespresso’s position as the market incumbent and protecting its brand as a high-quality premium coffee capsule, particularly as economic pressures, such as mounting interest rates and higher grocery prices, bite into household budgets.

“I think, moving forward, portioned coffee is really the system that’s going to prevail,” he says.

“In an environment of cost of living [pressures], to provide a solution that brings a … no-barista-required experience in your home, this is not only in terms of quality the best way to do it but also a sustainable way to do it because of its precision consumption design.”

But competition in the coffee space is fierce: Vermeulen is conscious there is no shortage of ways to consume coffee at home, something that 67 per cent of Australians do. Instant, ground, roasted whole beans, filter coffee, cold brew, and ready-to-drink coffees such as Dare all vie for consumer dollars that are increasingly being carefully counted and driving customers towards more affordable private-label brands.

Australia wants a separate dialogue with China on their dispute over wine, the agriculture minister said on Sunday, rejecting Beijing’s proposal to link wine with other trade issues as the two nations slowly seek to improve battered relations.

China’s removal of tariffs last month on Australian barley has raised hopes for an easing of wine tariffs, in place since 2021, which have hammered the country’s wine exports.

Bilateral relations sank in 2020 when Australia called for an inquiry into Covid-19 origins, triggering reprisals by Beijing, including a raft of trade restrictions that hurt Australia’s export-reliant economy.

China on Thursday proposed a “packaged solution” that would tie the wine dispute to those about duties on Australian imports of Chinese railway wheels, wind towers and stainless steel sinks, state news agency Xinhua reported.

But Agriculture Minister Murray Watt said on Sunday, “We see them as entirely separate matters.” The government wants the wine dispute “resolved in the same way the barley dispute was resolved – through dialogue”, he told the Australian Broadcasting Corp.

“We will continue our WTO (World Trade Organization) case when it comes to wine and we will continue to defend the case when it comes to steel,” Watt said, referring to disputes ongoing at the global trade body.

China was Australia’s top wine export market before Covid, peaking at $770 million for the 12 months to January 2020 when the pandemic hit. In the year to June, they had plunged to $5.2 million.

Endeavour’s largest shareholder, billionaire Bruce Mathieson, has taken an extraordinary swipe at the hotels and liquor retailing group, describing attempts to prevent the election of an experienced businessman he supports “a cynical attempt to ... entrench the insiders club on the ... board”.

In an increasingly acrimonious dispute, Mr Mathieson wrote to the Endeavour board complaining about the “material value destruction”, adding that the brand positioning for Dan Murphy’s and BWS, two retail chains owned by the company, was “strategically lost”.

Mr Mathieson, whose son Bruce Mathieson jnr is on the Endeavour board, is backing the election of former Myer chairman Bill Wavish at the company’s annual meeting this year. However, Endeavour chairman Peter Hearl declined to back his election because there was not “sufficient time” to conduct “customary processes it undertakes in selecting and appointing directors, including the associated probity assessments”.

Mr Mathieson, in his letter, said it was “preposterous” not to allow shareholders to vote for Mr Wavish if he had not obtained necessary approvals by the time of the AGM. “There is no realistic prospect that anyone could obtain all necessary regulatory approvals in such a short time frame,” he wrote. “This tactic could only be a cynical attempt to further entrench the insiders club on the Endeavour board.”

Other directors including Rod van Onselen, Anne Brennan and Bruce Mathieson jnr had been elected subject to obtaining all necessary approvals, Mr Mathieson wrote in his letter to Mr Hearl. “I am very concerned about the current and future strategic and operational priorities of the business, and current leadership’s ability to reverse these trends,” he added.

Mr Wavish, a former Woolworths executive, is also being supported by Roger Corbett, the long-time chief executive of the supermarket giant which once owned Endeavour. Mr Corbett, who resigned in 2006, said Dan Murphy’s had “lost the mojo”. “My expertise is really in the Dan Murphy and BWS chains, and I’ve got to say that I think they’re just a disgrace,” he said.

Others, however, are backing Endeavour. Tony Leon, who ran Dan Murphy’s until its sale to Woolworths in 1998, said Endeavour’s chief executive, Steve Donohue, was “the best fellow to operate this business”.

“He knows it better than anyone else. I understand what Mr Corbett said, but it’s not fair because it is still an amazing business,” he said. “They can go and get a new guy, but you think they’d run it better? I don’t want to be rude to my friends at Coles and Metcash, but BWS and Dan Murphy’s do very well.”

Close involvement

In a notice of meeting released on Wednesday, Mr Hearl wrote that Mr Wavish had been “invited to participate in the formal director search process under way and to be considered with other prospective candidates. At the time, he declined to participate in this process. The offer remains open to Mr Wavish to join the process.”

Mr Wavish was closely involved in Woolworths’ liquor and hotels businesses during his time with the company. He has touted his experience leading the re-organisation of part of the businesses into BWS, and the acquisition of large numbers of liquor licences.

After acquiring Dan Murphy’s, Woolworths entered into a partnership with the Mathieson family, creating Australian Leisure and Hospitality, a precursor to Endeavour. The company was listed on the ASX at $6.60 per share. They have fallen 25 per cent in 12 months, closing at $5.27.

Shoppers will be forking out more for grocery basket staples owned by Bega Group, including its Dairy Farmers and Pura Milk products, Vegemite and its flagship cheese brand, in the months ahead as the food group faces higher operational costs.

Bega Group’s executive chairman Barry Irvin said impending price rises would be “nothing as dramatic as we’ve seen in previous years”, but that operating costs like energy, logistics and fuel were still putting pressure on the company, which was unprofitable for the 2023 financial year.

“There are some rises in our business. Obviously, we look to try on each of them, but inevitably, some of them do have to be passed through,” Irvin said.

Irvin declined to comment on the size or percentage of the expected price rises, but said the increases would be spread across its portfolio of brands.

“I wouldn’t say that any of them are actually more protected than any other. They all absorb a share of costs,” he said. “We obviously consider carefully how we can mitigate the cost to the consumer and indeed, even how we can effectively take opportunity of promotions of products.”

Spikes in global dairy prices, dwindling milk supply, and escalated costs in fuel and energy saw Bega Group’s earnings and profits nosedive over the past year.

While revenue rose 12 per cent to $3.4 billion, higher interest rates and a 30 per cent increase in the farmgate milk price were responsible for driving Bega’s normalised profits down 38 per cent to $28.5 million and earnings down 11 per cent to $160.2 million for the 2023 financial year. Two of its bulk commodity plants were revalued, leading to a $230 million write-down that resulted in a statutory loss of $229.9 million.

The losses haven’t deterred investors, however, who sent the share price 1.25 per cent higher to close at $3.23.

The dairy and cheese giant will pay a fully franked dividend of 7.5 cents per share for the 2023 financial year, which is down from 11 cents the year before. The final dividend will be paid on September 21.

In a tightening economic environment where shoppers are turning to private-label brands, Bega’s well-know brands managed to hold its own, according to its results.

“We retained our market leading position in the yoghurt, milk-based beverages and spreads categories, with our yoghurt brands now accounting for more than 25 per cent of the high-growth yoghurt market,” executive chairman Barry Irvin and CEO Pete Findlay wrote in a joint address.

The dairy giant is paying attention to the popular trend of plant-based products. Earlier this year, it launched a plant-based cheese range that attracted online criticism from some shoppers.

After being pushed out of the plant-based beverages market, Bega has struck a deal with Milklab maker Noumi, another loss-making ASX-listed company, to distribute the popular plant-based milk to 30,000 customers a week.

The $1 billion business is considering how else it can enter the plant-based space, with Irvin earmarking Dare iced coffee as one of the brands that could release a plant-based milk offering.

However, the ASX-listed company expects more difficulty on the road ahead, warning of “relatively flat” financial performance for the 2024 financial year, normalised earnings to fall between $160-170 million (similar to what it unveiled this year) and expects a more positive outlook in the “medium term”.

UBS director Evan Karatzas said Bega’s 2024 financial year profit guidance was “broadly in line” with pre-reported commentary. “Cash generation improvement in FY24 [will be] a high focus after disappointing this year,” he wrote in a note.

E&P Capital retail analyst Phillip Kimber noted Bega’s share price had recovered 12 per cent since its June trading update and anticipates the share price will remain around current levels.

Bega Cheese says it has gained market share and margin momentum in the second half of the year following significant cost increases in the first quarter.

For FY23, the dairy company achieved a revenue of $3.4 billion, marking a 12 per cent rise from the previous year. It closed the fiscal year with a net debt of $203.6 million and a reduced leverage ratio of 1.6 times.

Statutory EBITDA (earnings before interest, tax, depreciation, and amortisation) was $144.1 million, with a post-tax loss of $229.9 million significantly impacted by non-cash asset impairment of $230 million.

Meanwhile, normalised EBITDA was $160.2 million, with a profit after tax of $28.5 million. 

According to Bega, its strategic decisions in the past five years played a pivotal role this year as it navigated “difficult and rapidly changing” conditions.

The implementation of price adjustments, cost reduction initiatives, and a stream of new products significantly improved the financial performance of the Branded segment, particularly in the latter part of the year.

However, the continued decline of milk production and excess milk manufacturing capacity have created a highly competitive environment and a disconnect between returns from globally treated commodity markets and Australian farm gate milk prices.

Bega said this scenario will continue for some time, resulting in a non-cash impairment and a strategic decision to right-size some of its commodity assets.

Reflecting on the results, executive chairman Barry Irvin emphasised the company’s strategy to shift to a predominantly branded business model.

“The non-cash impairment of our bulk commodity assets reflects industry circumstances and reinforces the importance of our strategy to transform to a predominantly branded business,” said Irvin.

“The right-sizing of our commodity assets and their further integration with our branded business creates a great platform for the support and growth of our brands while maintaining the capability to respond to changing market circumstances.”  

Looking ahead, Bega has outlined a restructuring and simplification program to accelerate its transition to an integrated, predominantly branded business.

Listed Australian olive oil grower and processor Cobram Estate Olives, has recorded a 21 per cent year-on-year boost in sales, to $169 million for the last financial year as its foray into the US pays off. 

The majority of the sales – $117 million – were from its Cobram Estate brand – the top-selling olive oil in Australian supermarkets – and its newer Red Island brand, which collectively rose by 17 per cent. 

Sales of Cobram Estate in the US surged 69 per cent and turnover in the market reached $43 million, up by 46 per cent. 

In a results presentation, the company reported a higher-yielding crop last year to 12.5 million litres, offset by a lower margin as the price of producing packaged goods rose. 

However, looking forward, the company says the Australian olive oil crop is down this year, however, it still expects to have sufficient oil for its packaged goods targets. 

“The sales outlook remains positive, benefiting from a global shortage of olive oil and record high global prices of European olive oil flowing through to both Australia and the US,” the company said.

Established in 1988, Cobram Estate Olives is Australia’s largest producer and marketer of premium quality extra virgin olive oil and owns more than 2.6 million olive trees across 7000ha of farmland in Victoria, and a further 334,000 trees on 558ha in California.

Maggie Beer Holdings’ new chief executive says the gourmet food producer will be able to withstand lower consumer spending after posting a drop in sales and cutting the value of its gifts and hampers business.

Kinda Grange, who took the helm in March, said the strength of the Maggie Beer brand in sauces, cooking stock and bone broth would help offset a trend where shoppers are trading down to cheaper products in other categories as higher interest rates and energy bills hit household budgets. But she acknowledged there were uncertainties in the economy and fluctuations in different product segments.

“It’s up and down across the business,” she said. Ms Grange said the lead-up to Christmas would be crucial for the company’s fortunes because of its natural skew toward gift-giving.

Maggie Beer Holdings suffered a 1.4 per cent drop in revenues to $88.7 million for the year to June 30. The online hampers business, Hampers & Gifts Australia, acquired for $40 million in 2021, recorded a 7.5 per cent fall in sales.

The company reported a net profit of $462,000 compared with a loss of $12.3 million a year earlier when its finances were affected by one-off expenses.

The online Hampers & Gifts business provided a one-off $14 million injection to bottom-line profits this year because it did not meet financial hurdles agreed upon with the vendors, resulting in a reversal of a provision the company had previously made for an expected earn-out payment.

But Maggie Beer Holdings wrote down the value of the Hampers & Gifts by $12.5 million.

Maggie Beer Holdings shares slipped 10 per cent to 13.5¢ by mid-afternoon on Monday.

The shares have halved in the past year from 33¢ at the end of August last year and were as high as 60¢ in February 2022.

Ms Grange said she kept an eye on the share price but that, ultimately, a disciplined implementation of growth plans would turn things around.

The strategy was set, and strong disciplines on cost would help mitigate inflation, she said. “The share price will hopefully follow.”

Ms Grange also wants to find a way to further harness the star power of celebrity chef Maggie Beer, who is a director of the ASX-listed company.

Ms Grange said Maggie Beer Holdings hadn’t lost faith in Hampers & Gifts, which she described as a good growth business for the long term that would be an important platform in the future. Users weren’t cutting back on the size of orders despite the more difficult economic conditions, she added.

The company is banking on an expansion of Maggie Beer-branded ice creams into larger supermarkets, scheduled for October, to contribute to higher sales this year.

Ms Grange, a former Goodman Fielder executive, wants to more than triple annual sales in five years to $300 million and expand into lifestyle, entertaining and gardening products.

The company is already expanding its range of baking and cooking products under the Maggie Living banner, through which it is selling wooden spoons and rolling pins.

Maggie Beer Holdings has retained its troublesome Paris Creek Farms premium milk and dairy products business after being unable to find a buyer at the right price. It generated a 10.5 per cent increase in sales in 2022-23 to $16.3 million, but margins shrunk.

The Maggie Beer business was established by the chef in the 1970s, selling through a small shop beside her Pheasant Farm restaurant in the Barossa Valley in South Australia.

They sold the gourmet foods business to the ASX-listed Longtable group in a two-tranche deal in 2016 and 2019, and it later changed its name to Maggie Beer Holdings.

Marley Spoon boss Rolf Weber says Australians are hanging onto their meal kit subscriptions, but they are also switching to budget pre-made food brands in another sign of penny-pinching among cost-conscious shoppers.

Weber said better customer retention rates and larger-value orders at Marley Spoon are a sign of strengthening consumer confidence, although he says the meal provider’s most affordable brand, Dinnerly, is becoming more appealing as the economy slows.

“Marley Spoon customers who see value in meal kits but may have to tighten the belt a notch, we see them moving to Dinnerly,” Weber said.

“They still get great value food, high-quality ingredients, but it’s a little bit simpler where we can offer [a] different value price point.”

Weber will look to expand Dinnerly’s ‘saver’ meal range that he said was seeing higher customer adoption. In April, Marley Spoon implemented a price freeze on Dinnerly’s subscription rates until the end of September, though the chief executive hinted at an extension.

“[The price freeze] certainly has been very well accepted, and while we may not put an official number to it, we will continue to hold our prices which we’ve been holding now for over a year,” he said.

“We are very confident that we won’t be increasing prices. If anything, we probably give something back to the customer, be it more on the plate, or lower cost.”

Climbing interest rates and inflation over the past 18 months have seen Australians shut their wallets to major retailers like Myer and flock to Kmart and Target instead, making retail bosses like JB Hi-Fi chief Terry Smart wary about further challenges in the trading environment ahead.

The trend of ‘trading down’ has seen people opt for private label brands at the supermarket and move from dining out to eating at home.

“[Customers] are telling us they are reducing spend on things like visits to the hairdresser and beauty services, entertainment, and gifts. Eating out, takeaway and coffees from the cafe are increasingly being seen as treats for a special occasion,” Coles chief executive Leah Weckert said last Monday.

“Unsurprisingly, they are looking for more specials, more affordable brands, and more affordable cuts of meat. Many of them are meal planning, stretching out the time between purchases of less urgent items such as cleaning and household items. And they are looking to catalogues, loyalty programs, and in-store markdowns to make their budgets go further,” she added.

At the same time, supermarket giants Coles and Woolworths have flagged double-digit spikes in shoplifting, a trend happening around the globe.

NAB chief executive Ross McEwan said the bank was seeing many people budgeting for the first time and saving $300 on average a month.

“A story close to home at NAB – in our offices we’re seeing long queues at the complimentary coffee machines as our colleagues swap a $5 takeaway for a free office brew. Nobody was using these machines a year ago! But I am delighted they want to be back in the office, so no complaints,” McEwan said in a speech last Thursday.