NEWS
LIQUOR ‘THE STRONGEST PERFORMER’ FOR THE COLES GROUP
CONCERNS OVER SA GOVERNMENT’S CDS REVIEW The South Australian Government is undertaking a review of its Container Deposit Scheme (CDS), which will include looking at whether to include any further containers in the scheme. Concerns have been raised surrounding claims that wine bottles could be included in the scheme with Australian Grape & Wine saying it is “deeply concerned” by those calls. “While recycling is strongly supported as a part of our environmental commitment, no compelling evidence has been presented to support the inclusion of wine bottles in South Australia’s CDS,” said Tony Battaglene, CEO of Australian Grape & Wine. Wine bottles currently represent less than 0.04 per cent of South Australia’s litter stream, as most bottles are consumed either at home or at a licensed premises. Both New South Wales and Queensland have introduced CDS in recent years, with neither state including wine bottles in their scheme. Battaglene added: “Good public policy is built upon a strong evidence base, and a proper weighing-up of costs and benefits. South Australia’s CDS has been a strong driver of litter reduction in public spaces without wine bottles being included, and with a focus on resource recovery, there is no evidence to suggest that CDS will be the appropriate vehicle. However, the costs to South Australian wine businesses and that economy are very clear and there are also potential flow on implications for the wider Australian industry.” Detailing the potential impact on South Australia’s wine industry, Battaglene said: “We estimate the costs to South Australian wine businesses would be around $5m per year. These costs would be felt by many small businesses that contribute so much to rural and regional economies in South Australia.” He added that with wine being a significant contributor to the South Australian economy and the state’s highest single export sector, the introduction of wine bottles into the state’s CDS has the potential to jeopardise the financial sustainability of the wine sector. “Australian Grape & Wine strongly supports the efforts of the South Australian Wine Industry Association (SAWIA) to inform South Australian wine businesses about the potential impact this review could have on their operations. “We echo SAWIA’s call to make sure businesses engage in the consultation process and encourage people to speak to their local member of parliament,” said Battaglene. You can have your say on the consultation process for the CDS review on the South Australian Government’s website.
12 | MARCH 2019 NATIONAL LIQUOR NEWS
Coles has delivered its first result since completing its demerger from Wesfarmers at the end of last year with CEO Steven Cain saying liquor was the strongest performer in the group. Overall the group delivered total sales revenue of $20.9bn, up 2.6 per cent on the prior corresponding period in the first of FY19, with EBITs of $733m, down 5.8 per cent. For the liquor group total sales revenue was up by 0.6 per cent to $1.7bn with EBITs of $85m, up seven per cent. Speaking about the liquor group’s performance, Cain said: “The liquor segment’s sales and EBIT result was impacted by New Year’s Eve falling into Q3 this year, as opposed to Q2 in the prior year, despite this EBIT growth was seven per cent for the half. “Liquor was the strongest performer in the group, with all metrics trending in a positive direction.” In highlighting where that growth has come from, Cain added: “Our work around promoting exclusive brands is paying off and this category now represents 19 per cent of sales. Average basket size continued to improve driven by general market trends of premiumisation and a favourable mix impact from the spirits category overall. “Exclusive label brands are growing faster than non-exclusive brands with over 50 new lines launched in the half.” He added: “Liquorland continued to be the strongest performer in the segment during the period, through our continued focus on range, exclusive brand innovation and providing more convenient solutions to customers through click and collect, same-day and next-day delivery. “Gross margin increased by 10 basis points to 28.3 per cent primarily due to margin improvements from the exclusive brand expansion and improved supplier collaboration.” Coles also said that it is continuing to rebrand its First Choice network to First Choice Liquor Market, which has resulted in “improved trading and positive customer responses around a refreshed range and lower prices”. Part of the five-year transformation for Coles Liquor has been renewing the Liquorland stores and this has been a key focus over the last few years. Eighty per cent of the group’s Liquorland stores have now been completed and Cain said these stores are “delivering on our expectations”. Cain also said that online successes seen by the group as a whole have been replicated in liquor with online growing at around 30 per cent, helped “by growth in click and collect”.
