Group sales for Endeavour Group hit $6.5billion in the first half of FY23, up 2.6% versus the first half of FY22, thanks to a strong performance in the on-premise.

Group EBIT for the half of $644 million was 15.8% higher than the prior comparative period.

Endeavour’s hotels arm, which owns 344 pubs across Australia, saw its sales surge 55.3% to $1.056billion and earnings more than double, up 111.6% to $258million.

However, retail EBIT of $418 million represented a decline of 9.3%, as the group cycled a very strong HY22 where retail sales were elevated due to COVID-19 restrictions in place for on-premise hospitality venues.

Endeavour Group Managing Director and CEO Steve Donohue (above) said: “Our team has delivered strong results group-wide, with a standout December from the first restriction-free festive season in three years.

“Our unique network of brands and partners put us at the heart of social occasions, particularly over the festive period. December saw customers return to more normal holiday activities and a full social calendar. Domestic travel has returned to regional and coastal towns, with stores and hotels in these areas performing strongly.

“With our physical and online network, and our digital capabilities, we were able to continue to deliver true omnichannel experiences, from new gifting services, to click and collect, electronic shelf labels and image search functionality in apps, and in Hotels via the growth of order and pay at table.

“We continue to focus on meeting customer demand for drinks discovery: a strong new product pipeline and our
extensive selection of premium and craft options has contributed to our overall earnings.”

ALH pubs recession-proof

In the first restriction free half in three years, customers returned to socialise in its hotels during the festive season, which served over 40,000 meals on Christmas Day alone.

Donohue told the Australian Financial Review that “sociability” was recession proof, with trading at its hotels remaining strong in the first five weeks of 2023, despite nine successive interest rate rises by the Reserve Bank of Australia.

Sales are up 31.5% on the previous year. Donohue said the group is currently absorbing a 3.7% increase in beer price excise rises by the Federal Government for on-tap beer in its pubs. It will be holding prices at current levels “for a number of weeks”, while it monitors the economic conditions.

The star performing brands

Sales over the festive period were strong, with both BWS and Dan Murphy’s delivering record sales in the weeks leading into Christmas and New Year’s Day. Across retail, sales momentum improved through the half, with comparable sales improving from 7.5% in Q1, to 2.7% in Q2.

Endeavour said consumer preferences for premium categories and new products have continued to underpin a strong gross profit outcome.

Donohue told the Australian Financial Review that inflation was running at around 10% in pre-mixed spirits but that hadn’t stopped robust growth.

He said one of the star performers had been Beam Suntory’s -196 Double Lemon. Double Lemon has been the number one RTD launch in the past five years, according to IRI data.