The need for innovation was a key topic at Endeavour Group’s half-yearly Supplier Forum, which took place virtually for suppliers this week.
“What customers are looking for increasingly is more discovery, more interesting stuff, more new things and more convenience,” Endeavour Group MD and CEO Steve Donohue said.
He shared that 40% of the products that the company retails today did not exist eight years ago and he encouraged suppliers to innovate to capitalise on the consumer desire for innovation. Donohue noted that in the last 5 years alone, 85% of sales growth for the company has come from New Product Development (NPD).
The majority of NPD products have been spirits-based products, beer products and associated products. For example seltzers – which did not exist two years ago in Australia – and now make up 10% of premix sales for Endeavour Group.
Donohue emphasised the opportunity for the wine category to innovate in order to meet the constantly changing needs of customers as their tastes, attitudes and lifestyles evolve.
“The wine category needs to keep pace with changing customer expectations; lower alcohol, no alcohol, smaller format, easier format, something new, something different, something I’ve never seen before,” Donohue explained.
“All of these trends are part of the expectation of the younger consumer in particular, and unfortunately, we’re finding that the wine category is struggling to keep pace with that. We’re really committed as a team and as wine producers ourselves, to tapping into that consumer need, and we want to partner with suppliers to do it.”
Challenges and costs
Supply chain challenges and increasing costs were the other big topics for suppliers at the forum.
“Like everybody, we are experiencing pressure in the supply chain and that manifests in both impact on availability and costs,” Donohue (above) said. “Together, we have managed to wade through the availability challenge, and we are genuinely grateful for everybody’s efforts in trying to put stock on shelves and moving through the supply chain, but it’s costing more than ever before.”
However, he assured suppliers the company was doing everything it could to hold off any cost increases for as long as possible.
“What we have done is try to hone in on exactly how much it is costing us at the moment, and therefore what the cost increases for us look like,” he said. “One of our intentions is to try to continue to hold that cost which we view as an investment in trying to facilitate stock movement for suppliers for as long as we can, but we’re also going to start sharing that information with suppliers to give everybody some visibility on what it is costing at the moment to move things around.”
The company also announced it was extending the temporary 14 day payment terms, which was first introduced in April 2020 to allow faster payment to small suppliers.
“We are committed to supporting our suppliers through these never-before-seen circumstances and we recognise the economic challenges faced by small suppliers over the last two years,” Endeavour Group’s General Manager Merchandising Tim Carroll said.
“In a world with so much uncertainty right now, we know how much stability and certainty means, and that is why I am very happy to announce that we will be extending the temporary changes to small supplier payment terms until June 2023.”
Endeavour Group’s inaugural Supplier of the Year Awards will take place on May 12, 2022 at the Timber Yard in Port Melbourne.