Coles LiquorBusiness

The categories driving growth for Coles Liquor

Coles has delivered strong HY21 results, with net profit rising 14.5% to $560 million across the group, including 15.1% growth in Coles Liquor.

Consistent with the first quarter, Coles Liquor maintained strong sales throughout the half. However, the results tapered off in the second quarter as restrictions around the country eased. Other continuing trends included the preference for larger pack sizes across the beer, ready-to-drink (RTD) and spirits categories as well as strong eCommerce sales.

Liquor sales revenue was $1.9 billion for the half, with comparable sales growth also growing by 15.1%. For the second quarter, liquor sales revenue increased by 13.4% and comparable sales growth was 13.1% relative to the prior corresponding period.

Coles said sales growth was driven by a strong performance across all banners, channels and categories, particularly eCommerce and larger format stores, and the spirits and RTD categories.

“Progress during the half was made under the “Simplify and refocus” horizon of liquor’s refreshed strategy including
the implementation of a new customer focused organisational structure and simplifying the operating model with
the roll out of simplified ticketing,” Coles said.

“An investment in service and team capability, particularly leading into the peak Christmas trading period, supported strong improvements in customer metrics and availability.

“An enhanced range was a strategic focus during the half with range changes implemented at Liquorland stores across key growth categories such as gin, rose, craft beer and RTDs.

“Complementing the range activity, local product contribution continued to grow with 126 local lines launched during the half.

Recent investments in systems, customer experience and capacity supported strong eCommerce sales growth of 90% for the half. Three dark stores in Victoria, Queensland and Western Australia were opened to increase capacity,
streamline order fulfilment and improve speed of delivery for customers. Enhancements were also made to the
online shopping experience through greater website personalisation features.

Renewal activity continued across all three Liquor banners during the half.

“The new Liquorland trial concept [above] was expanded to a multi-site trial and continues to show encouraging signs with customers responding positively to the range and space enhancements,” Coles said.

First Choice Liquor Market conversions also continued to perform strongly with the format now rolled out to 70% of the First Choice network.

Coles said the Vintage Cellars trial concept store in Ashburton continued to show promising growth with the concept rolled out to three more stores – including Carlton (above) during the half and successful low-cost elements beginning to be rolled out across the wider fleet.

Gross margin decreased by 34 bps to 21.5% largely due to ongoing changes in mix as a result of COVID-19, with the retailer noting that customers were shifting towards larger pack sizes.

Coles Liquor outlook for the remainder of FY21

In liquor, sales remained elevated for Coles during the first six weeks of the third quarter with comparable sales growth of 12.5%, cycling the impact of the bushfires in the prior corresponding period.

Consistent with supermarkets, Coles said liquor will also be cycling the elevated sales due to COVID-19, which it said will present challenges given the fixed cost nature of the liquor business.

Coles Liquor sales revenue jumps 17.4% in first quarter

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Categories: Business