Metcash Liquor sales increased 19.6% in the first four months of FY21, with continued strong sales in its retail network offsetting the impact of COVID-19 restrictions for on-premise customers.

The distributor is the second largest player in Australian liquor market and supplies 90% of independent liquor stores
in the country.

Sales to the IBA retail banner group increased 23.7%, while IBA retail scan sales for the same period were up 20.6%. It follows Metcash posting one of its strongest-ever half-yearly results in December, with underlying profit after tax increasing 43% to $129.6million and growth in the liquor division up 30.6%.

The latest results were revealed at a Metcash investor day on Tuesday.

“We are talking a year on now (from COVID-19) and if you look at the numbers we reported in the trading update versus what others in the market have and clearly this is no longer just a temporary change, there has definitely been a shift in consumer behaviour,” Metcash chief executive Jeff Adams told The Australian.

“I think it is difficult to predict, but all we can say that is a year on we are still performing well, we think many of those factors we have called out are reasons why we have invested in stores to make them more competitive, people have definitely shifted to shopping more locally.

“Our stores tend to be more neighbourhood which plays to that and also more regional and remote areas where … there has been a migration out of the cities to regional and remote areas – and that is where the strength of our network is.”

The focus on neighbourbood shopping was noted by Cellarbrations Gisborne owner Tony Bongiovanni (above) in an editorial for Drinks Digest in November 2020.

“Consumers have also become more accustomed to shopping locally, which has boosted the independent retail trade,” Bongiovanni said. “Independents have an integral and important part to play moving forward – if they didn’t exist, would people ever really know if they are paying too little or too much for a product or service?

“Another thing that the ‘big box’ retailers can never beat is the individuality and person-to-person contact independent retailers offer consumers. We’re also more agile – we can respond instantly to changing landscapes without having to consult a board of directors or shareholders.”

Plans to turbo-charge e-commerce

Metcash said it plans to invest $375million in its MFuture initiative over the next three years, with $10million earmarked for its liquor arm. There will also be major investment in the e-commerce space for liquor.

The distributor fast=tracked its Shop MyLocal initiative last year when COVID-19 lockdowns disrupted trade.

IBA launched Shop MyLocal in partnership with Marketplacer on April 6, after less than three months in development. The initial plan had been to kick off on a much smaller scale, with a smaller geographical coverage. IBA intended to pilot the platform with a select number of stores in NSW for three months, then broaden out the reach from there.

But COVID-19 meant the approach needed to be revised. IBA decided to open Shop MyLocal up to all IBA retailers who expressed an interest.

Within a month, online basket size was already three times the normal basket value.

Adams told The Australian Financial Review on Tuesday that e-commerce was “potentially a $1 billion opportunity” for Metcash.