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Shop local trend boosts Metcash liquor sales

Continued “robust demand” in the retail network and the recovery of on-premise sales following the easing of COVID-19 restrictions saw total liquor sales for Metcash increase by 8.7% in FY22 to $4.8billion.

The company said sales growth in the retail network came from both the IBA banner group and contract customers, supported by a continued shift in preference for local neighbourhood shopping and less overseas travel and duty-free shopping.

Wholesale sales to the IBA banner group increased 4.4% (+28.1% on a two-year basis) with all brands performing well, particularly the Bottle-O, Cellarbrations and IGA Liquor.

The company revealed that RTDs, spirits and wine continued to be its strongest growth categories for Metcash Liquor.

In the on-premise, sales continued to recover with the easing of COVID-related restrictions, increasing 30% compared with the prior corresponding year. Growth was strongest in Western Australia, which was least impacted by COVID-related restrictions.

Group revenue increased 6.4% to $17.4billion, compared to $16.4billion in FY21, with significant underlying growth in each pillar, building on what Metcash described as “exceptional sales performance” in the prior corresponding year.

Group CEO Doug Jones said: “I am pleased to be presenting Metcash’s FY22 results, my first as Group CEO. The results are outstanding, another record year, and represent continued progress on the exceptional performance in FY21.

“The FY22 results were underpinned by the success of our MFuture initiatives designed to further improve the competitiveness of our retail network, continuation of the local neighbourhood shopping trend and the success of
recent strategic acquisitions.

“The number of external challenges increased in the second half and our supply chain and retail operations, both our own and those of our retail partners, exhibited significant resilience and flexibility. There were more lockdowns due to the Omicron COVID variant, major supply chain challenges, flooding in South Australia, NSW and Queensland which resulted in supply route disruptions, and towards the end of the financial year challenges related to Russia’s invasion of Ukraine and lockdowns in China.

Online sales focus for Metcash Liquor

Metcash reported its continued rollout of new ecommerce platforms in the food and liquor networks was reaping rewards.

It said that online sales through its digital platforms in Independent Hardware Group (IHG) and Total Tools now represent around 6% of total network sales in hardware division.

“Both food and liquor teams will continue to work with and learn from IHG and particularly Total Tools colleagues,” Jones said.

“As you can see, hardware are leaders in the ecommerce, digital engagement and loyalty space. They’ve done this through sensible investments in practical tools and this has delivered increased traffic and improved conversion through more relevant and personalised engagement and expanded online offers.”

Jones told investors that “it’s true to say that we started late [on digital] but [adoption] was spurred on by COVID-19”.

“Good progress has been made on a wide range of digital initiatives, including progressing the rollout of new eCommerce platforms in the Food and Liquor networks,” Jones said.

Customer satisfaction hits all-time high

The results follow IBA banner Cellarbrations winning the Roy Morgan Customer Satisfaction ‘Best of the Best’ Award for 2021 for the first time in May.

The award went to the company that achieved the highest customer satisfaction of all 37 winners in the Annual Roy Morgan Customer Satisfaction Awards.

Cellarbrations was the first liquor store to win the prestigious ‘Best of the Best’ Award and breaks the four year streak of the ‘Car Manufacturer of the Year’ category which had wins in the ‘Best of the Best’ Award for Isuzu UTE in 2018 and 2020 and Lexus in 2017 and 2019.

Cellarbrations also won Liquor Store of the Year, the first time it has taken out the award. The banner is part of Metcash’s Independent Brands Australia network.

ALM CEO Chris Baddock said: “As the saying goes, success has many friends. This is spot on in this case with so much commitment from our independent retailers, our supplier partners and the entire team at IBA ALM who are all dedicated to championing successful independents.

“Cellarbrations is a wonderful example of the local independent retailer servicing their local community with the right range and service, while using the national retailer services and scale provided by Independent Brands Australia (IBA).”

The impact of inflation in FY23

Metcash said strong sales momentum had continued in the first seven weeks of FY23 supported by the increased preference for local neighbourhood shopping and the improved competitiveness of its independent retail networks.

“While elevated inflation has continued into the first half of 2023, there is uncertainty over the level of inflation going forward, as well as how the impact of inflation and other cost of living increases may impact consumer behaviour,” the company noted.

“We are continuing to work closely with our suppliers and retailers to help shoppers manage the impact of inflation
by providing better value options through offering a wider range of products at competitive prices.

“Supply chain challenges, increased DC labour and COVID-related costs are continuing and may remain a reality for all
pillars over FY23.”

For Metcash Liquor, total sales increased 8.6% compared with the prior corresponding period reflecting continuation of strong demand across retail stores and a recovery in on-premise sales. Wholesale sales to the IBA retail banner group
increased 2.7%.

“While remaining focused on managing the supply change challenges, we are also helping shoppers manage the impact of inflation by providing better value options through a wider range of products at competitive prices,” Jones said.

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