Metcash liquor sales grow by more than $1billion

Metcash has released its 2022 Annual Report, which shows Australians are continuing the habit of liquor shopping in their local communities even as pandemic restrictions ease.

Metcash is the second-largest player in the Australian liquor market supplying 90% of independent liquor stores in Australia. Its Independent Brands Australia (IBA) network is home to a number of successful national brands such as Cellarbrations, the Bottle-O, IGA Liquor and Porters Liquor. State-based brands in our portfolio include Thirsty Camel,
Big Bargain Bottleshop and Duncans.

Metcash also supplies more than 12,000 liquor customers through its Australian Liquor Marketers (ALM) division, which includes supply agreements with large and small contract banner groups, un-bannered liquor stores, as well on-premise and
eCommerce retailers.

IBA retailers are positioned in local neighbourhoods, with local product ranges tailored to each location and community, supported by bespoke promotional programs.

“The outstanding performance of our Liquor pillar in FY22 was underpinned by a continuation of strong demand in the retail
network and a recovery in on-premise sales,” Metcash reported.

“Over the past two years, the Pillar has grown sales by more than $1billion and added an additional 1150 customer accounts.
Sales growth in the retail network was in both the IBA banner group and contract customers, supported by continuation
of the shift in preference for local neighbourhood shopping and less overseas and duty free shopping due to overseas
travel restrictions.

“The year also included making good progress on our MFuture initiatives including growing the Owned and Exclusive
brands category, further improving supply chain flexibility and efficiency, increasing brand awareness and appeal,
and the rollout of our digital initiatives.”

Cellarbrations named Australia’s best retailer

In May 2022, Cellarbrations won the Roy Morgan Customer Satisfaction ‘Best of the Best’ Award for 2021 for the first time. The award is given to the company that achieves 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. It also won Liquor Store of the Year, the first time it has taken out the award.

“We were delighted that our Cellarbrations brand was recently named ‘Liquor Store of the Year’ in the annual
2022 Roy Morgan Customer Satisfaction awards,” Metcash reported.

“This recognition is a result of sustained and continued investment in our brand awareness raising activities, supported by
fantastic local service and continued improvement in price competitiveness. The awards are testament to the true
partnership that exists between our retailers, suppliers and Metcash.”

Focus on owned and exclusive brands

During the year, Metcash said it continued to leverage its acquisition in FY20 of the Kollaras portfolio of owned and exclusive brands and worked towards achieving its target of increasing owned and exclusive sales by more than $100million, representing 5% of total liquor sales.

“Our O&E portfolio was expanded during the year with the addition of exclusive brands including Cricketers Arms (beer)
and Cougar RTD (Ready to Drink), and the launch of P.O.E.T.S Country Beer, which we co-created,” Metcash reported.

“We were pleased to have received two bronze and five silver medals at the recent 2022 London Wine Competition for our
O&E wines. This world-renowned, international wine event recognises global wine brands that have successfully been
created in three key areas – quality, value and packaging.

“Sales for our O&E portfolio increased 23% in FY22. Our investment to expand O&E not only benefits Metcash, but
also improves margins for retailers and delivers great value to our shoppers.”

Supply chain challenges

Metcash noted that its liquor supply chain faced many external challenges in the year.

“We proudly supported our independent retailer partners throughout this period by using our significant scale and
a strategic investment in inventory to ensure their shelves continued to be stocked,” Metcash reported.

“We also partnered with key suppliers to realise further supply chain efficiencies, to help deliver our aspiration of being their
preferred route to market partner. One of our new initiatives is ALM Connect, a new charge-through service which has
both supplier and retailer support and is due for launch later in 2022. It involves the development of an ‘extended
aisle’ offer that provides access to non-warehoused ranges.

“We have commenced the initial ALM Connect pilot in Tasmania and early feedback has been very positive.”

Metcash liquor digital transformation

In line with increased retailer interest in eCommerce solutions following the onset of COVID-19, the business
accelerated its trial of the Shop My Local marketplace with Click’n’Collect and Click’n’Deliver options available.

“We also trialled a branded Cellarbrations offer in Victoria, with learnings from both trials resulting in a decision to
move forward with a branded eCommerce solution,” Metcash reported.

“Branded eCommerce platforms are now in market for Cellarbrations, the Bottle-O and Porters, and retailers
that were using Shop My Local have converted to the new platforms. There are now 156 stores live with the
new platforms, and we have received very positive shopper and retailer feedback. We also have a liquor ‘aisle’
offer available on our new Food eCommerce platform, IGA Shop Online.

“The average basket size of an online order has grown to be over $110, and our average quick commerce basket
(DoorDash and UberEats same day delivery partners) is over $45.”

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